A Project Report ON Inventory Mangement AT Tata Steel LTD

A
PROJECT REPORT
ON
INVENTORY MANGEMENT
AT
TATA STEEL LTD.
“IN PARTIAL FULLFILMENT FOR THE COURSE OF MBA”

PREPARED BY: RINKI KUMARI
ROLLNO: 10MBA02260
JAMSHEDPUR WOMENS COLLEGE
TATA STEEL (JWC) Page 1

DECLARATION
I RINKY KUMARI hereby declare that the project entitle “inventory
management at Tata steel” in the record of authentic work carried out by
me during the period from 16th may to 15th July in partial fulfillment of
master of business administration(MBA) of Jamshedpur women’s college
,Jamshedpur.
This is the work, which is done by me under the guidance and

supervision of Mr. Indrajeet Roy (head-account and finance) and my
facilitator Mr.Imtiaz Ahmed of Tata steel, Jamshedpur.
The findings and conclusions of this report are based on my personal
study and experience, during the tenure of my summer internship.
Name: Rinky Kumari
Date: 16th July, 2011
Place: Tata steel, Jamshedpur Signature:

ACKNOWLEDGEMENT
“If heart could speak words would have no end”
Learning is the beginning of wealth.
Learning is the beginning of health.
Learning is the beginning of spiritually.
Searching and learning is where the miracle process all begins.
This project for me was a great practical learning process along with the theoretical knowledge
which I have gained. To work under the guidance, immense support, motivation, inspiration of
all business leader of “TATA STEEL LTD” was a great experience for me.
First and foremost I would like to thank “TATA STEEL LTD” and “Jamshedpur women’s college”
for giving me an opportunity to undertake this project work.
I take this opportunity to express my gratitude towards those whose guidance and co-operation
has helped me immensely during the completion of this project. I express my sincere thank to
Mr.Iindrajeet Roy and Mr.Imtiaz Ahmed without whose guidance this project would not have
assumed real dimensions.
Finally, I would like to thank all the staff member of “TATA STEEL LTD” for helping me at various
situations when required.
RINKY KUMARI
rinki__sharma @sify.com

EXECUTIVE SUMMARY
Established in 1907, Tata steel is Asia’s first and India’s largest integrated private
sector steel company with its captive iron ore and coal mines and one of the
world most modern steel making and facilities at Jamshedpur in eastern India
which includes a state-of-art cold rolling mill complex. Tata steel is the among the
lowest cost producer of steel in the world.
The aim of the project is to understand what inventory management is and how it
work in Tata steel and other steel companies. What is the various method of
inventory management and what method does Tata steel follows for the same.
But some other aims are as follows:
To carry out a critical analysis of Tata steel (steel division) inventory

management.
To find out the area of weakness in the existing inventory control
mechanism.
To extrapolate the decision position with the steel industry.
The objectives of the project are:-
To understand the concept of inventory management and its management

in Tata steel.
To calculate the various inventory ratios and drive conclusion from it.
To analysis the efficiency of purchase department, supply chain department
and finance and account department related to inventory management.
To understand and analysis the deviation in the theoretical aspect and
practical implementation of an inventory system.
The aim of the project is to make use of the study of various inventory
management methods and utilizing them to find the best inventory
management method, the steel industry should flow to minimize problem the
plant faces.
The projects concludes with major finding and recommendations.

TABLE OF CONENT
Sl No. Content Page No.
1. Introduction to STEEL industry 06
2. Journey to TATA STEEL 14
3. Board of Directors 21
4. Mission and Vision 30
5. Strategic Business Units 31
6. Finance and Accounts Department of TATA STEEL 42
7. Inventory Management and its types 47
8. Inventory Management at TATA STEEL 53
9. Balance Sheet 60
10. Profit and loss Accounts 61
11. Cost Sheet 63
12. Financial Ratio Analysis of TATA STEEL 65
13. Company overview of JINDAL and SAIL 75
14. Comparison between TATA STEEL,JINDAL and SAIL 81
15. Presentation of inventory of TATA STEEL 85
16. Finding and Recommendations 88
17. Bibliography 91

INTRODUCTION TO STEEL INDUSTRY:-
1. GLOBAL SCENARIO:-
Steel, the recycled material is one of the top products in the manufacturing sector of the world.
The history of the modern steel industry began in the late 1850s, but since then steel has been
basic to the world's industrial economy. It grew at a rapid pace. It started reaching heights, with
the global players in the steel industry such as Tata Steel, SAIL and others.
The sub-prime crisis that erupted in the US and Western Europe impacted the global financial
system, resulting in a significant cut-back in investment flows and the availability of funds. The
developing world continued to enjoy growth in its demand for goods and services, contributing
to the global inflationary trends in oil, coal, minerals and other commodities. The cost of food
similarly rose in several countries during the latter part of the year, leading to unrest and
hardship amongst the poorer nations. Some governments have lately begun to impose anti-
inflationary measures on their over-heated economies to curb runaway price increases and
consumption.
The global steel industry predictably also faced pressure on their margins arising from cost
increases in iron ore and coking coal, but for the most part these increases were absorbed by the
market through steel price increases. The full impact of these cost increases on steel producers
and the consequential higher steel prices to user industries will, however, only be felt in the
current year, at which time one might expect some slow-down in economic activity and
consumer demand. In 2007 the World Crude Steel output reached to 1343.5 million metric tons
and showed a growth of 7.5% over the previous year. It is the fifth consecutive year that world
crude steel production grew by more than 7%.
 In 2007 the World Crude Steel output reached 1343.5 million metric tons and showed a
growth of 7.5% over the previous year. It is the fifth consecutive year that world crude
steel production grew by more than 7%. (Source: IISI)
 China remained the world’s largest Crude Steel producer in 2007 also (489.00 million
metric tons) followed by Japan (112.47 million metric tons) and USA (97.20 million

metric tons). India occupied the 5 th position (53.10 million metric tons) for the second
consecutive year. (Source: IISI)
 The International Iron & Steel Institute (IISI) in its forecast for 2008 has predicted that
2008 will be another strong year for the steel industry with apparent steel use rising from
1,202 million metric tonnes in 2007 to 1,282 million metric tonnes in 2008 i.e. by 6.7%.
Further, the BRIC (Brazil, Russia, India and China) countries will continue to lead the
growth with an expected increase in production by over 11% compared to 2007.
The following table shows the growth in terms of crude steel production for the top ten steel
producing nations
Figures in million tones

2. DOMESTIC SENARIO:-
The steel industry in
India has been moving from strength to strength and according to the Annual Report 2009-10 by
the Ministry of Steel, India has emerged as the fifth largest producer of steel in the world and is
likely to become the second largest producer of crude steel by 2015-16.
Led by strong demand for autos and engineering services, the domestic steel demand in India
remains robust, as per Moody's sectoral
70.67 Annual Production 2009- analysis on Asia's steel sector. According
10 to the analysis, the outlook for the
(In million
64.88 tonnes)
India domestic operating environment is
China positive, driven by robust growth in
71.2
infrastructure, autos and construction and
Japan
90.5
constrains on additional supply by 2011.
Russi
a
571.8 Indian steel industry was reserved for the
USA
Public Sector (Government controlled
Companies) till the year 1991except for
Tata Iron & Steel Company Ltd the only private sector integrated steel plant. After the economic
reforms of 1991, this sector was opened up to the private sector and India has seen an impressive
growth in the production of steel. Consequently, the capital structure of the steel companies has
undergone notable changes in the post liberalization era. The Contribution of the steel industry is
near to 2% of its GDP.
SAIL is India's largest steel producing company. With a turnover of Rs. 43,935 crore and annual
production of around 12.4 million tonne, the company is among the four Maharatnas of the
country's Central Public Sector Enterprises. SAIL has five integrated steel plants, three
special plants, and one subsidiary in different parts of the country. During the calendar year
2009, SAIL emerged as the second highest net profit earning company amongst all steel
companies of the world. This was mainly because of increased thrust on fund management and
replaced high cost short term loans with low cost debts. SAIL has a credit rating of AAA from
FITCH thus making it a credit-worthy company.

Tata Steel is the World’s sixth largest and India's second-largest and second-most profitable
company in private sector with annual production of around 6.5 million tonne. It is the first
integrated steel plant in Asia and world’s second most geographically diversified steel producer
and a Fortune 500 company. It was Tata Steel’s acquisition of Anglo-Dutch steel maker Corus
which catapulted it into a major global steel producer. According to FITCH, Tata Steel has a
stable credit rating of BBB- which reflects the company’s position as a dominant and efficient
value added steel producer.
Jindal Steel and Power Limited is another major steel producer in the Indian steel industry. Its
annual production in 2009-10 was around 1.3 million tonnes. JSPL has consistently tapped new
opportunities by increasing production capacity, diversifying investments and leveraging its core
capabilities to venture into new businesses. The company produces economical and efficient
steel and power through backward integration. An enterprising spirit and ability to discern future
trends have been the driving force of this company’s remarkable growth. It has won wide
acclaim for its efficient operations and commitment towards environment and society.
Rashtriya Ispat Nigam Limited (RINL) is the first shore based integrated steel plant in the
country located at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August
1992 with a capacity to produce 3 million tonne per annum (Mtpa) of liquid steel. The plant has
been built to match international standards with state-of-the-art technology, incorporating
extensive energy saving and pollution control measures. It achieved a production level of 1.9
million tonnes in 2009-10. FITCH has awarded BB- credit rating to RINL.
Bhushan Steel is another major player in the Indian steel industry. It is comparatively new to the
steel industry and has a present capacity of around 1.9 million tonnes. It has various expansion
plans lined up. Its annual production was around 1.1 million tonnes in the year 2009-10. CARE
has awarded a rating of A+ which is indicative of the robust cash flow generated by this
company.

Indian Steel Industry is gradually trying to trying to offset the effects of recession by
concentrating on transportation and construction projects that are usually funded by the
Government. But has Indian economy is showing favorable signs of recovery;
domestic demand for steel is
gradually increasing fuelled Annual Steel Production in
by growth in automobile and
14 Million Tonnes (2009-10)
infrastructure. In consistent to 12
the above trend, the domestic 10
8
steel producers are going for 6
4 Annual Steel
capacity expansion to account 2 Production in Million…
for the surging demand for 0

SAIL Bhushan RINL
steel. The National Steel Steel
Policy has forecasted the

domestic demand to reach 110
million tonnes by 2019-20 and annual steel consumption to grow by 16% annually. This
indicates robust growth opportunities in the steel sector and subsequently this is going to reflect
on the capital structure of the steel companies.

TOP STEEL PRODUCING COMPANIES:-
SOME OF THE LEADING COMPANIES IN INDIAN STEEL INDUSTRY ARE:

 Bokaro Steel Plant: Steel manufacturer.
 Essar Steel: Producer of sponge iron, steel and iron ore pellets.
 Jindal Iron & Steel: Producer of galvanized steel products.
 Jindal Steel & Power: Manufacturer of mild steel slabs and sponge iron.
 Steel Authority of India: Manufacturer of steel and iron.
Tata Steel: Producer and supplier of wire rods, bars, and steel flats

UNDERSTANDING THE STEEL INDUSTRY USING MICHAEL PORTER ANAYLYSIS:-
Michael Porter had identified five competitive forces that shape every single industry and the
market. These forces help in analyzing the industry from the intensity of competition to the
probability and attractiveness of an industry.
THREAT OF NEW ENTRANTS:
The easier it is for new companies to enter the industry, the more cut-throat competition there
will be. Steel industry is highly capital intensive and is estimated that to set up 1 MTPA capacity
of integrated steel plant, it requires around Rs. 30 billion of investment depending upon the
location of the plant and technology used. The government follows a favorable policy for steel
manufacturers but certain discrepancies involved in allocation of iron ore mines and land
acquisition in India.
BARGAINING POWER OF SUPPLIERS :

If one supplier has large impact on the company‟s margin and volume then it holds substantial
power. In the steel industry the bargaining power of supplier is very low because the big players
in the industry have their own mines for major raw materials. However, still a few companies
have to depend up on suppliers for the raw materials.
BARGAINING POWER OF BUYER :

In the steel industry unlike the household goods market the buyers have a very low bargaining
power. The only effort which can be done towards ensuring that the buyers are saved in the curb
or ceiling laid by the government on the prices which can be charged by the companies on its
product. However, most of the sale of steel is to the other industries or to through the distribution
network and very less to the common man.

COMPETITIVE RIVALRY:
In India the steel industry is dominated by a major few players only and the degree of
competitive rivalry is very low as the demand is always more than the supply or the production
of the companies.
THREATS OF SUBSTITUTES:
The presence of substitute products increases the propensity of customers to switch to
alternatives. The usage of aluminum has been constantly growing in the automobile sector which
used to be the major customer of the steel industry. However, because of the durability and other
features of the steel, aluminum does not stand as a threat in the market

COMPANY PROFILE: TATA IRON AND STEEL COMPANY
We aspire to be the global steel industry benchmark for Value creation and corporate citizenship
Tata Steel is the world's 8th largest steel manufacturer. It operates in more than 20 countries
and has a commercial presence in over 50.
The company was established in Jamshedpur, India, in 1907. In the past few years, Tata Steel has
invested in Corus (UK, renamed Tata Steel Europe), Millennium Steel (renamed Tata Steel
Thailand) and NatSteel Holdings (Singapore). With these, the company has created a
manufacturing and marketing network in Europe, South East Asia and the Pacific-rim countries,
currently ranked 410th on Fortune Global 500; it is based in Jamshedpur, Jharkhand, India. It is part
of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable
company in private sector with consolidated revenues of 132,110 crore (US$29.33 billion) and net
profit of over 12,350 crores (US$2.74 billion) during the year ended March 31, 2008. Tata steel is the
8th most valuable brand according to an annual survey conducted by Brand Finance and The Economic
Times in 2010.
Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions; the company has
become a multinational with operations in various countries. The Jamshedpur plant contains the
DCS supplied by Honeywell. The registered office of Tata Steel is in Mumbai. The company
was also recognized as the world's best steel producer by World Steel Dynamics in 2005. The

company is listed on Bombay Stock Exchange and National Stock Exchange of India, and
employs about 81,269 people.
It has the capacity to produce over 30 million tonnes of crude steel every year. The company
produces crude steel and basic steel products, and makes steel for building and construction
applications through Tata BlueScope Steel, its joint venture with Australia's BlueScope Steel.
Tata Steel has also set up joint ventures for the development of limestone mines in Thailand, the
procurement of low-ash coal from Australia and coking coal from Mozambique, and the setting
up of a deep-sea port in Orissa in India. The company is exploring opportunities in the titanium
dioxide business in Tamil Nadu, India, and will soon be producing high carbon ferrochrome
from its plant in South Africa.
It was Tata Steel’s acquisition of Anglo-Dutch steel maker Corus which catapulted it into a
major global steel producer. It also raised debt capital from the market to finance the takeover.
Infusion of debt in the capital structure has long term implications on its capital budgeting
decisions and has also impacted the dividend and investment decisions. According to FITCH,
Tata Steel has a stable credit rating of BBB- which reflects the company’s position as a dominant
and efficient value added steel producer.
Indian Steel Industry is gradually trying to trying to offset the effects of recession by
concentrating on transportation and construction projects that are usually funded by the
Government. But has Indian economy is showing favorable signs of recovery; domestic demand
for steel is gradually increasing fuelled by growth in automobile and infrastructure. In consistent
to the above trend, the domestic steel producers are going for capacity expansion to account for
the surging demand for steel. The National Steel Policy has forecasted the domestic demand to
reach 110 million tonnes by 2019-20 and annual steel consumption to grow by 16% annually.
This indicates robust growth opportunities in the steel sector and subsequently this is going to
reflect on the capital structure of the steel companies including Tata Steel.

ANOTHER FEATHER IN CAPITAL OF TATA STEEL:-
Corporate Awards:-
The rating of being one of the world’s top ten “most admired
companies” by FORTUNE magazine and the hay group in the industry-
metal category.
The economic times company of the year award.
The best establishment award by the president of India, Mrs. Pratibha
Devi Singh Patil.
The super brand award of Tata Tiscon.
Companies with highest corporate image by Nielsen.
Award for Excellence in knowledge:-

The most admired knowledge enterprise (MAKE) Asia award 2009 for
the 6th time.
The fifth BML Munjal award for excellence in learning and Development.
Award for excellence in corporate Social Responsibility (CSR):-

The golden peacock global award.
The significant achievement in sustainability certification from CII-ITC.
The TERI CSR award.
The times of India CSR award.
The rashtriya khel protsahan purashkar.
The Ispat paryavaran purashkar special award.
The Xiamen city top Employers award to NAT steel Xiamen for the second
time.
The outstanding award for employee relation and welfare 2009 to siam
industrial wires (SIW) Thailand.
The good governance for environment in the factory and enterprises award
to SIW.
The corporate social responsibility department of industrial work to SIW.
The green star award from the industrial Estate Authority of Thailand (IEAT)
to riam construction steel company (SCSC).

FOUNDERS OF TATA STEEL:-
JAMSEDJI NUSSERWANJI TATA (1839 – 1904)
He was a visionary behind Tata Steel .He realized that

India’s real freedom depended upon its self-sufficiency in
scientific knowledge, power and steel, thus devoted the
major part of his life, and his fortune to three great
enterprises-The Indian institute of Science at Bangalore, the
Hydro-electric schemes and the Iron & Steel Works at
Jamshedpur .He envisaged and conceived a steel town to the
very last detail, later to be named as Jamshedpur.
J.N. Tata had exhorted to his sons to pursue and develop his
life’s work ; his elder son, Sir Dorabji Tata(1859-1933) carried out the bequest with scrupulous
zeal and distinction .Thus , even though it was Jamshedji Tata who had envisioned the mammoth
projects, it was in fact Dorabji Tata who actually brought the ventures to existence and fruition.
He was the first chairman of the gigantic Tata enterprises.
It was in 1907 that the village of Sakchi was discovered at the confluence of two rivers,
Subarnarekha and Kharkhai and the railways station of Kalimati .The Tata Iron and Steel
Company was floated.
SIR DORABJI TATA (1859 – 1933)
Sir Dorabji Tata(1859-1933) carried out the bequest with

scrupulous zeal and distinction. Thus, even though it was
Jamshedji Tata who had envisioned the mammoth
projects, it was in fact Dorabji Tata who actually brought
the ventures to existence and fruition. He was the first
chairman of the gigantic Tata enterprises.
J. R. D. TATA (1904 – 1993)
JEHANGIR RATANJI DADABHI TATA has been one of the greatest builders and personalities
of modern India in the twentieth century.
He assumed Chairmanship of Tata Steel at the young age of 34, but his charismatic, disciplined
and forward looking leadership over the next 50 years led the Tata Group to new height of
achievement, expansion and modernization.

His style of management was to pick the best person for
the job at hand and let him have the latitude to carry out
the job. He was never interested for Micro- Management.
It was he who zeroed in on Sumant Moolgaokar, the
engineering genius who successfully steered our company
for many years. He was a visionary whose thinking was
far ahead of his time, which helped Tata Group launching
its own Airline, now known as Air India. He was awarded
the country’s highest civilian honour, the Bharat Ratna in
1992.
RATAN NAVAL TATA
Ratan Navel Tata was born on December 28, 1937, in

Surat. He is the present Chairman of Tata Group, India’s
largest conglomerate founded by Jamshedji Tata and
consolidated and expanded by later generation of his
family. He is one of the most well known and respected
industrialists in India.
Tata was born into wealthy and famous family of

Mumbai. His childhood was troubled as his parents
separated in the mid 1940s, when he was about seven
and his younger brother was five. His mother moved out
and both he and his brother were raised by his grandmother Lady Navarjbai.
Ratan Tata completed his degree in architecture with structural engineering from Cornell
University in 1962, and the Advance management Program from Harvard Business School in
1975. He joined the Tata Group in December 1962 on the advice of JRD Tata. He was first sent
to Jamshedpur to work at Tata steel. He worked on the floor with the other blue collar
employees, shoveling limestone and handling the blast furnaces. He was appointed the Director
In Charge of The National Radio & Electronics Company Limited (Nelco) in 1971 and was
successful in turning Nelco around.

BOARD OF DIRECTORS
Mr. Ratan N. Tata Chairman
Mr. B. Muthuraman Vice Chairman
Mr. Nusli N. Wadia Company Director
Mr. Iahaat Hussain Board Member
Mr. Subodh Bhargava Board Member
Mr. Jacobus Schraven Non-Executive Independent Director
Dr. Jamshed J. Irani Board Member
Mr. Andrew Robb Non-Executive Independent Director
Mr. S. M. Palia Company Director
Mr. Suresh Krishna Financial Institutions Nominee
Mr. Kirby Adams Managing Director & CEO, Tata Steel Europe
Mr. H.M. Nerurkar Managing Director, Tata Steel Limited
Tata Steel Group Senior Management

H.M. Nerurkar Managing Director, Tata Steel Limited
Kirby Adams Managing Director & CEO, Tata Steel Europe
Dr. Karl,Ulrich Kohler Chief Operating Officer, Tata Steel Europe
Koushik Chatterjee Group Chief Financial Officer
Jean Sebastien Jacques Group Director (Strategy)
Manzer Hussain Group Director (Communication)
Kees Gerretse Group Director (Procurement)
Avneesh Gupta Group Director (Total Quality Management)

Dr. Debashish Bhattacharjee Director (Research, Development and Technology)
Andrew Page Director (Health and Safety)
Dr. Paul Brooks Director (Environment)
Shreekant Mokashi Chief (Group Information Services)
Uday Chaturvedi Managing Director, Corus Strip Products UK, TSE
Anand Sen Vice President (TQM and shared services) TSL
Frank Royle Director (Finance) TSE
AbanIndra M. Misra Vice President (Coke, Sinterand Iron and IR) TSL
Theo Henrar Managing Director, Corus Strip Products IJmuiden, TSE
Varun Jha Vice President (Engineering and Chhartisgarh Project) TSL
Tor Farquhar Director (Human Resourse) TSE
Radhakrishnan Nair Chief Human Resourse Officer, TSL
Adriaan Vollebergh Managing Director, Tata Steel International, TSE
Partha Sengupta Vice President (Raw Material) TSL
Hridayeshwar Jha Vice President (Orissa Project) TSL
Alastair Altken Managing Director (Distribution, UK and Ireland) TSE
N.K. Misra Group Head (Mergers and Acquisitions) TSL
Dook van den Boer Manufacturing Director (Corus Strip Products IJmuiden) TSE
Sanjeev Paul Vice President (Corporate Services) TSL
Jon Bolton Manufacturing Director (Corus Long Products) TSE
T.V. Narendran Vice President (Safety and Flat Products) TSL
Rod Jones Director (Corus Consulting) TSE
Bimlendra Jha Vide President (Long Products) TSL
V.S.N. Murty Chief Finacial Controller (Corporate) TSL
Laptawee Senavonge President, Tata Steel Thailand
Vivek Kamra President and CEO, NatSteel Holdings
Sandip Biswas Group Head(Corporate Finance, Treasury and Investor Relations,

TSL)

Lim Say Yan Group Head(Corporate Assurance and Risk Management)
A. Anjeneyan Company Secretary and Chief of Compliance, TSL
Helen Matheson Director Legal, TSE
Dr. Shaun Doherty Executive Officer to the CEO,TSE
Arun Misra Principal Executive Officer, TSL

ORGANISATIONAL PROFILE OF TATA STEEL:-
Established in 1907, Tata Steel is Asia's first and India's largest private sector steel company.
Tata Steel is among the lowest cost producers of steel in the world and one of the few select steel
companies in the world that is EVA+ (Economic Value Added).
Tata Steel has operations in 10 countries and maintains a strategic presence in select
Geographic’s through exports.
GROWTH AND GLOBALISATION.
JAMSHEDPUR, INDIA-
5 million tonnes per annum, slated to reach 7 MTPA in 2008&10 MTPA by 2011.
Partnership with Corus
On partnership with Corus group, the combined entity will be the 6th largest steel producer and
the 2nd most geographically diversified steel company in the world.
Nat steel Asia Singapore
2 million tonnes; Singapore, China, Vietnam, Thailand and three other South East Asian
countries.
Tata Steel, Thailand-
1.7 million tonnes
Limestone mining in Thailand.
Low ash coal in Australia.

Wire manufacturing unit in Sri Lanka known as Lanka special steel captive raw material
resources in India give it a competitive advantage.
Other Projects:
India
 1.2 MTPA Metcoke project in West Bengal

 Deep sea port in Dhamra, Orissa
 Titanium Dioxide project in Tamil Nadu
 Joint Venture with BlueScope Steel for metallic coating and painting steel unit
Overseas:
 Development of a source of low ash coal from Queensland, Australia
 Ferro Chrome production in Richards Bay, South Africa

GLOBAL ASPIRATIONS: OUR POSSIBILITIES
Steel Plant Projects:
India:
The Company has embarked upon setting up three

green field steel plants in eastern India:
12 MTPA* plant in Jharkhand
6 MTPA plant in Orissa
5 MTPA plant in Chhattisgarh
Jamshedpur Steel Works will become a 7 MTPA unit

by 2008 and 10 MTPA by 2010.

STEEL BUSINESS UNIT:-
RAW MATERIAL AND FINISHED PRODUCTS
Ore/coal and iron ore mining mainly and iron making.
LONG PRODUCTS
Wire rod mill. Bar mill Merchant mill.

FLAT PRODUCTS
Hot strip mill. Cold rolling mill

MISION AND VISSION OF TATA STEEL:-
MISSION:
Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to
strengthen India’s industrial base through the effective utilization of staff and materials. The
means envisaged to achieve this are high technology and productivity, consistent with modern
management practices.
VISSION:
We aspire to be the global steel industry benchmark for
Value Creation and Corporate Citizenship
We make the difference through:
Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting
with pace, pride and passion.
Our offer, by becoming the supplier of choice, delivering premium products and services, and
creating value for our customers.
Our innovative approach, by developing leading edge solutions in technology, processes and
products.
Our conduct, by providing a safe working place, respecting the environment, caring for our
communities and demonstrating high ethical standards.

STRATEGIC BUSINESS UNITS
Apart from the main steel division, Tata Steel's operations are grouped under the following
strategic business units.
BEARINGS DIVISIONS:
Manufactures ball bearings, double row self-aligning bearings, clutch release bearings and
tapped roller bearing for two wheelers, fans, water pum
FERRO ALLOYS AND MINERALS DIVISION:
Operates chrome mines and has unit for making ferro chrome and ferro manganese. Its one of the
largest players in the global ferro chrome marke

RINGS AND AGRICO DIVISION:
The ring plant manufactures forged and rolled rings for bearings and automotive components.
TATA AGRICO
It is the first organized manufacturer in India of hand tools and implements for application in
agriculture.
TATA GROWTH SHOP (TGS):
Has designed, developed, manufactured, erected and commissioned thousands of tonnes of

equipments ranging from overhead cranes to high precision components, including a rocket
launch pad for the Indian Space and Research Organization.
TUBES DIVISION:
The biggest steel tube manufacturer with the largest market share in the country, it aspires to
strengthen its market presence by expanding and modernizing its commercial and precision tube
manufacturing capacity.
WIRE DIVISION:
A pioneer in the manufacture of steel wires in India, it produces coated and uncoated wires,
branded as Tata Wiron. The division also operates a wholly owned subsidiary in Sri Lanka.

SOME MAJOR BRANDS
This is world’s first branded Cold Rolled Steel product.
Galvanized corrugated sheets.
Re-bars
It is the most valued brand in plumbing segment.
It caters to the equipment needs of the farming, mining &construction.
It has made deep inroads in the highly competitive auto market.
It services requirements in a wide gamut of industries including automotive,

agriculture, fencing and power.
Galvano is galvanized plain (GP) steel offering available in sheet & coil forms
for all customer segments like white goods , panels, bus bodies etc. Galvano
offers commitment to deliver high performaces to meet diverse and stringent
needs of the General Engineering Segment.

SUBSIDIARY / ASSOCIATES / JVs
THE TINPLATE COMPANY OF INDIA LTD: 35% market share in industry.
TAYO ROLLS LTD: Country's leading roll manufacturer and supplier
TATA RYERSON LTD: In the business of steel processing and distribution
TATA REFRACTORIES: The largest producer of refractories in India
TATA SPONGE IRON LTD: Has an installed capacity of 240,000 tonnes
TATA METALLIKS LTD: Among the top wealth creators in the country.

TATA PIGMENTS LTD: Produces synthetic iron oxide pigments.
JAMSHEDPUR INJECTION POWDER LTD: Produces 15,000 tonnes of desulphurising

compounds per annum.
TM INTERNATIONAL LOGISTICS LIMITED: Services include material handling and

port operations.
INDIAN STEEL AND WIRE PRODUCTS: Comprises a wire unit and a steel rolling
manufacturing unit
METAL JUNCTION.COM: Provides e-business services and solutions to Indian Industry.

DHAMRA PORT: Deep drafted port project, a 50:50 JV between Tata Steel and L&T.
TRF Ltd: An engineered-to-order equipment and systems provider.
JAMSHEDPUR UTILITY AND SERVICE COMPANY :The country's first municipal and
civic services enterprise.
TATA BLUESCOPE: Metallic coating and painting facility.\
LANKA SPECIAL STEEL LIMITED:A wholly owned subsidiary it is the only unit in Sri Lanka
manufacturing galvanized wires

SILA EASTERN COMPANY LIMITED: A 49% joint venture to undertake development
of limestone mines in Thailand.
NATSTEEL ASIA SINGAPORE:Presence in six countries in S E Asia and China, mainly

long products
MILLENNIUM STEEL, THAILAND: Long products rolling.
TATA NYK: A 50:50 JV for shipping dry bulk and break bulk cargo.
CORUS: Now a part of Tata Steel Group. It manufactures, processes and distributes metal
products as well as provides design, technology and consultancy services.

The expansion will
EXPANSIONS AND NEW PLANTS allow the company to
utilize its existing
Recognizing the need for growth as the world recovers from the Resources more
financial crisis, the Tata Steel Group has put into action initiatives efficiently, whether
that will ensure its growth is sustainable. they be manpower,
These initiatives span the entire supply chain, from raw materials Utilities or the
to logistics and value-added manufacturing. Company’s
capital…..
MTPA EXPANSION PROJECT AT JAMSHEDPUR
Company is executing a 2.9 million tonne expansion project at

Jamshedpur which is expected to complete in the third quarter of financial year 2011-12. When
completed, this project will enhance Jamshedpur work’s capacity to 9.7 mtpa.
The expansion project will involve setting up the following new facilities: a 3.05 mtpa capacity
blast furnace, 2 coke oven batteries each with a capacity of 0.7 mtpa, a 6 mtpa pellet plant, a 2.4
mtpa Thin Slab Casting & Rolling (TSCR) facility, a Linz-Donawitz (LD) Basic Oxygen
Converter and a lime calcining plant. The configuration and capacity of these new facilities have
been chosen with a strategic rationale.
In addition, the Company is focusing on several downstream facilities that are being set up in
coated and packaging products, which are consistent with the Company’s long-term strategy to
increase the ratio of value-added products in its output. The Company continues to pursue its
long-term strategy to build green field capacity in India, including in Orissa.
PROGRESS OF RAW MATERIAL PROJECTS
The coal project in Mozambique and the iron ore project in Canada are the key projects in the
strategy to enhance the Group’s raw materials integration. Significant progress has been made by
the management of the Joint Venture Company with Riversdale Mining in Mozambique towards
the development of the Benga reserves, as is shown by the Benga Coal and Benga Power
projects receiving environmental clearance. The Benga coal reserves have been upgraded by
84% to 502 million tonnes and the measured coal resource by 126% to 710 million tonnes,
firmly establishing Benga as one of the most significant coal deposits outside Australia. The
Company is also one of the largest shareholders in Riversdale Mining Limited, which is listed in
Australia.

PEST ANALYSIS ON TATA STEEL
1. POLITICAL ASPECT
The government gets several roles influencing the steel industry as follows:
 Competitor with the public sector steel companies;

 Resource allocator by leading the policies; and
 Regulator on the market industry.
Tata has made huge investments in politically unstable countries like Iran or Thailand. The
company contributes to the nation by being a model in terms of corporate social responsibilities
and citizen. Indeed, it is a way to face the political environment risks.
2. ECONOMICAL ASPECT
The business environment was deteriorated because of the subprime crisis in the U.S.and the
liquidity crisis. By acquiring Corus, Tata had gained the fifth place in world steel production.
The fluctuations of the currency rates had been a risk for the Corus acquisition, which had thus
been financed by amount of debt. Consequently, it broke Tata in its predicted investments and
capacity expansions plans. It was facing the fear for recession on negative economical growth.
Then, the steel industry is really linked with the economical context.
It means the steel industry production depends on energy prices; demand in the automotive
market or in the construction market. An increase in these industries would also strongly affect
Tata’s bottom line.
3. SOCIAL ASPECT
In 2009, Tata Steel Ltd. has been awarded the Golden Peacock Global Award for Corporate
Social Responsibility. It proves the good ethical behavior of the company and that CSR has a
huge place in the business strategy. Tata takes part in social development programs. For instance,
the company helped gave medical treatment in rural areas and slums. Furthermore, it participated
in the deployment of a company’s mobile medical unit.

4. TECHNOLOGICAL ASPECT
Indians are becoming one of the most technologic populations in the world today in terms of
their advance in research and development. Advances in technology India have really skilled
specialists in different fields, especially in IT applications. It means that it helps corporations to
make savings on operating costs and to develop more efficient and effective ways of harvesting
and processing the natural reserve.
SWOT ANALYSIS ON TATA STEEL

1. STRENGTH
 Strong brand name of TSL and TATA Group.
 India Operations capable of meeting its own iron ore requirements.
 Raw material security building through global operations.
 Leading sales and distribution capability.
 Low ware labor availability.
 EVA + Company.
2. WEAKNESS
 Low R&D investment.
 Unscientific Mining.
 Low Productivity.
3. OPPORTUNITIES
 Unexplored rural markets.
 Growing domestic markets.
 Growing global markets.
 Developing countries not restrained under the Kyoto protocol.
 Carbon credit trading on the rise.
 High investment in infrastructure development.
4. THREATS
 World’s big producer.
 China set to becoming a net exporter.
 High duties relating to pollution control and high energy cost.
 Global economic slowdown.

THE FINANCE AND ACCOUNTS DEPARTMENT
The Accounts department of TATA STEEL was established with the objective of recording of
financial transaction and meeting the statutory requirement. With the change in time,
requirements & perception, it has evolved itself into FINANCE & ACCOUNTS division with a
vision to becoming a business partner and aid the top management in running business, moving
from transaction processor to financial analysts. Composition of professionals Finance &
Accounts division integrated its man power requirement with that of TATA STEEL. The
company’s initiatives to attract and retain the best talents also form part of the division. Finance
and accounts division has 152 professionals, having one or more qualifications, which add up to
74 chartered
Accountants and 6 company secretaries and 20 other professionals.
Technical up gradation office automation as a part of modern day initiatives has also been
studied and is in the advanced stag of implementation in the division. Some of the major
technologies, facilities & equipment implemented during the year in the division include:
1. Fully Integrated SAP R3 system, wherein the transactional data is entered in the
respective parent department. Thus avoidance of double data entry in the division.
2. LAN connectivity throughout the division & e- mail ID’s to the entire officer’s
facilitating easy communication. Also available is ―round the clock internet facility‖ to
all the officers for gathering & sharing information.
3. Office automation in the area of data dissemination & document storage is also coming to
the division in big way in the near future.
4. Revamping of Intranet site of F&A in the progress to enrich & update the employees with
latest updates.

FUNCTIONS OF DEPARTMENT
Functions performed by the division and the reports provided to the top management include:
 Monthly profit statement.

 Monthly, quarterly & annual reports.
 Decision support system
 Payment of salaries, wages & other dues to employees.
 Cost & inventory reports.
 Payment of dues & compliance to employees.
 Inter-company comparisons.
 Payment to vendors.
 Various analyses.
 Evaluation of business projects.
GROUPS AND SECTIONS OF FINANCE AND ACCOUNTS

DEPARTMENT
The whole finance and accounts department of Jamshedpur is divided in different groups and
sections. These are:
1. Cash Office
2. Finance and Cost
3. Payroll Accounts
4. Purchase and Capital Group
5. Sales and Indirect Taxation
Sales and direct taxation group is responsible for accounting. It is also related to post sales
activities like debtors & town accounting. It comprises of the following section:
 Exercise section
 Freight section
 Town Debtor’s section
 Sundry Debtor’s section

CONSOLIDATED FINANCIAL HIGHLIGHTS 2009-10
Turnover
160,000.00 147,329.00
140,000.00
120,000.00
102,393.00
100,000.00
80,000.00
60,000.00
40,000.00 27,504.00
23,292.00 25,395.00 26,202.00
20,000.00
-
FY 09 FY 10 Q1 FY 10 Q2 FY 10 Q3 FY 10 Q4 FY 10
(Rs in crores)
Turnover = Sales and Other Operating Income (-) Excise Duty

EBITDA Profit After Tax
20,000 18,495 6,000
4,951
18,000 5,000
16,000 4,000
14,000 3,000 2,434
12,000 2,000
10,000 9,340 1,000 473
8,000 -
6,000 5,333 (1,000)
4,000 3,401 (2,000)
(2,009) (2,209)
2,000 402 (3,000)
204 (2,707)
- (4,000)
FY 09 FY 10 Q1 FY Q2 FY Q3 FY Q4 FY FY 09 FY 10 Q1 FY Q2 FY Q3 FY Q4 FY
10 10 10 10 10 10 10 10
(Rs in crores) (Rs in crores)
EBITDA = Profit before exceptional Profit after taxes, minority

items and taxes (+) Net Finance interest and share of profit of
Charges
associates
(+) Depreciation (-) Minority Interest
(+) Share of Profit of Associates

EBITDA Margin Return on Invested
20% 19%
Capital
18% 30%
25%
16% 25%
14% 13% 13% 20%
20%
12%
15% 13%
10% 9%
10% 8%
8%
5%
6%
4% 0%
2%
2% 1% -5% -3%
-4%
0% -10%
FY 09 FY 10 Q1 FY Q2 FY Q3 FY Q4 FY FY 09 FY 10 Q1 FY Q2 FY Q3 FY Q4 FY
10 10 10 10 10 10 10 10
Net Operating Profit before tax and exceptional

EBITDA Margin = EBITDA/Turnover items /(Net Fixed Assets (excluding WIP) +
Goodwill + Investments + Adjusted Net Current
Assets)

WHAT IS INVENTORY?
Inventory refers to stock pile of product a firm is offering for sale and components that make up
the product .in other words inventory is composed of assets that will be sold in future in normal
course of business operation. Inventory is a quantity or store of goods that is held for some
purpose or use .inventory play a crucial role in the companies purchasing –production –
marketing.
TYPES OF INVENTORY:-
RAW MATERIAL
Raw materials are inventory items that are used in the manufacturer's conversion process to
produce components, subassemblies, or finished products. These inventory items may be
commodities or extracted materials that the firm or its subsidiary has produced or extracted.
They also may be objects or elements that the firm has purchased from outside the organization.
Even if the item is partially assembled or is considered a finished good to the supplier, the
purchaser may classify it as a raw material if his or her firm had no input into its production.
Typically, raw materials are commodities such as ore, grain, minerals, petroleum, chemicals,
paper, wood, paint, steel, and food items. However, items such as nuts and bolts, ball bearings,
key stock, casters, seats, wheels, and even engines may be regarded as raw materials if they are
purchased from outside the firm.
WORK-IN-PROCESS
Work-in-process (WIP) is made up of all the materials, parts (components), assemblies, and
subassemblies that are being processed or are waiting to be processed within the system. This
generally includes all material—from raw material that has been released for initial processing
up to material that has been completely processed and is awaiting final inspection and acceptance
before inclusion in finished goods.
Any item that has a parent but is not a raw material is considered to be work-in-process. A
glance at the rolling cart product structure tree example reveals that work-in-process in this
situation consists of tops, leg assemblies, frames, legs, and casters. Actually, the leg assembly
and casters are labeled as subassemblies because the leg assembly consists of legs and casters
and the casters are assembled from wheels, ball bearings, axles, and caster frames.

FINISHED GOODS
A finished good is a completed part that is ready for a customer order. Therefore, finished goods
inventory is the stock of completed products. These goods have been inspected and have passed
final inspection requirements so that they can be transferred out of work-in-process and into
finished goods inventory. From this point, finished goods can be sold directly to their final user,
sold to retailers, sold to wholesalers, sent to distribution centers, or held in anticipation of a
customer order.
SPARES PARTS
This category includes those products, which are accessories to main products
produced for the purpose of sale. Example of spare items is blots .nuts, clamps,
screws etc.
INVENTORY MANAGEMENT:
Inventory management system provides information to efficiently manage flow of
materials, effectively utilize peoples and equipment ,co-ordinate internal activities
and communicate with customers .inventory management does not make decisions
or manage operations, they provide the information to managers who make more
accurate and timely decisions to manage their operations.
A firm neglecting the management of inventories will be jeopardizing its long run
profitability and may fail ultimately .it is possible for a company to reduce its level
of inventories to a considerable degree without any adverse effect on production and
sales by using simple inventory planning and control techniques .the reduction in
excessive inventories carries a favorable impact on companies profitability.
The purpose of inventory management is to keep the stock in such a way that
neither there is over stocking nor under stocking.
A proper planning of purchasing, handling, storing and accounting should form a

part of inventory management an efficient system of management will determine.
AIM OF INVENTORY MANAGEMENT:
reduced inventory investment

improved customer service
increased productivity

OBJECTIVE OF INVENTORY MANAGEMENT:
To Ensure Adequate Stock.

Minimize the Cost of Purchasing and Storage.
To Reduce the Risk of Deterioration.
Effective Use of Available Capital.
To Give Maximum Satisfaction to Customers.
To Minimize Loss Due to Price Decline.
Maximum Use of Storage Capacity.
to insure a continuous supply of raw material to facilitate uninterrupted
production.
NEED FOR INVENTORY MANAGEMENT:
Recent studies have shown that in many manufacturing companies the inventory
investment can range from 20 to 30% of its total investment capital. Inventory
management must have as its aim the reduction and control of that investment in
inventory .organizational responsibilities vary from industry to industry and more
particularly with the size of the company .responsibility for inventory management
was usually a multi shared function amongst most of operating department .with
the growing trends towards material management concept ,top management has
seen the wisdom of delegating full authority and responsibility for the handling of
material to one person –the material manager .the purchasing department exerts a
certain amount of influence on inventory decision.
WHY SHOULD INVENTORY BE HELD?
Holding inventory involves blocking of firm‟s fund and the cost of storage and
handling. Every business enterprise has to maintain a certain level of inventories to
facilitate uninterrupted production and smooth running of business. In absence of
inventories, a firm will have to make purchase as soon as it receives orders. It
means loss of time and delays in the execution of orders which May sometimes
result in loss of business and customer.

INVENTORY MANAGEMENT TECHNIQUE:
The objective of inventory control is to reduce the investment in inventory without
affecting the efficiency in the areas of production and sales .There are various
techniques for inventory control:
1. ECONOMIC ORDER QUANTITY (EOQ):-
Refers to the optimum order size that will result in the lowest total of order and
carrying cost for an item of inventory given its expected uses, carrying cost and
ordering cost. By calculating an economic order quantity the firm attempts to
determine the order size that will minimize the total inventory cost. We assume the
order cost, is constant regardless of the size of order. In the purchase of raw
material or other item, these cost represents the clerical costs involve in placing an
order as well as certain cost receiving and checking the goods once they arrive . for
finished goods inventories ordering cost involve scheduling a production run .when
set up cost are large as they are in producing a material piece of metal, for eg-
ordering cost are likely to involve nothing more than record keeping. The total
ordering cost are nothing but cost per order times the number of orders for that
period.
To find out EOQ; the formula is= √2AO/C
Where; A= Annual consumption; O= ordering cost, C= carrying cost
2. ABC ANALYSIS:-
In the case of manufacturing company of reasonable size the number of items of

inventory runs into hundreds if not more. From the point of view of monitoring
information for control it becomes extremely difficult to consider each one of these
items. The ABC analysis comes in quiet handy and enables management to
concentrate attention and keep a close watch on relatively less number of items
which accounts for a large percentage of the value of annual usage of all items of
inventory management. The ABC classification process is an analysis of range of
items, such as finished products or customer into 3 categories:
A- Outstanding importance,
B- Average importance
C- Relatively unimportant

As a basis for control scheme. Each category can and sometime should be handled in
a different way. With more attention being devoted to category A, less to B, and still
less to C.ABC analysis is applied to inventory management as a rule of thumb.
3. FNS CLASSIFICATION:-
This type of analysis is more concerned from the point of view of movement of items
or issue of the items .items are classified s fast moving, slow moving and non
moving based on consumption pattern ot the item.
„F‟ items are those items, which are fast moving i.e. in a given period of time ,say a
month or a year they have been issued up till number of items.
„S‟ items are those items which are slow moving in the sense that in a given period
of time they have been issued in a very limited number of time .
„N‟ non moving items are those, which are not at all issued for a considerable period
of time.
4. XYZ CLASSIFICATION:-
XYZ classification has the value of inventory stored as basis for differentiation .it is
calculated by dividing an item‟s current stock value of the stores
„X‟ items are those whose value of balance stocks lying in the stock are very high,
and are 60% of total stock value
„Y‟ items are those items whose value of balance stock is moderate and is 30% of
total stock value.
„z‟ items are those whose value of balance stock lying in the stock is very low, and
are 30% of total stock value
5. HML CLASSIFICATION:-
The analysis shows the position of brands among the light medium and heavy
buyers, based on both buyers &volume.
HEAVY BUYERS: consumers who are the most intensive buyer of the brand.
MEDIUM BUYER: consumer who are medium intensive buyer of the brand.
LIGHT BUYER: consumer who are the least intensive buyer of the brand.

INVENTORY MANAGEMENT AT TATA STEEL:
Inventory management is one of the most important managerial activities. TATA
steel has its own mines and quarries in India and also in some other countries. The
raw material inventory includes materials from its own source as well as purchased
from others. Raw material inventory therefore lies both at works and its place of
extraction. These are transported to works both by road and rail.
To maintain the minimum required inventory is not an easy task. There are many
reasons for each different organization as to what the quantity should be
maintained. TATA STEEL‟s raw material inventory consists of mainly coal and iron
ore, but there are many other things included in it in small quantities. TATA
STEEL has its transportation system which helps in carrying the materials from
different locations to Jamshedpur works.
Each types of production department maintain separate inventory level. TATA steel
maintains different types of inventory i.e. raw material, WIP, finished goods, transit
inventory, buffer inventory, anticipation inventory and cycle inventory.
For valuation of inventory TATA Steel generally uses FIFO method and for
ordering, they use EOQ method.
First in first out (FIFO): A method of valuation of inventory, by which the cost are
allocated on the assumption that goods are consumed or sold in the order in which
they are received and taken in to stock.
Economic Ordering Quantity (EOQ): It is the optimum quantity of goods for which if
orders are placed, the aggregate order placing cost and the aggregate inventory
carrying cost will be equal and economical. There will not be any loss by either way.
For any item of goods, annual requirement in units, cost of placing one order, cost of
carrying one unit in inventory for one year are the influencing factors. Any change
in one or more of them will change the EOQ of that item.
To find out EOQ; the formula is= √2AO/C
Where; A= Annual consumption; O= ordering cost, C= carrying cost

CHANNELS OF ORDERING RAW MATERIAL:
1)
1) Production
Production
dept.
dept.
6) Inventory
6) Inventory 2)
2) Inventory
Inventory
dept.
dept. controller
controller
5) Recievable
5) Recievable 3)
3) Purchase
Purchase
debt.
debt. dept.
dept.
4)
4) Supplier
Supplier
dept.
dept.
POLICIES MAINTAINED BY TATA STEEL FOR INVENTORIES:
Finished and semi-finished products produced and purchased by the Company

are carried at lower of cost and net realizable Value.
Work-in-progress is carried at lower of cost and net realizable value.

Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realizable value.
Stores and spare parts are carried at cost. Necessary provision is made and
charged to revenue in case of identified obsolete and non-moving items.
Cost of inventories is generally ascertained on the „weighted average‟ basis.
Work-in-progress and finished and semi-finished products are valued on full
absorption cost basis.
TATA STEEL has its own electric plant, water preserver and gas preserver for
regular production. Dimna Lake is one of the advance points for Jamshedpur plant.

INTEGRATED IT SOLUTION AT TATA STEEL
ENTERPRISE RESOURCE PLANNING
Tata steel has adopted ERP technology to take a lead in competitive steel industry
and through constant learning, innovation and refinement of its business
operations, has transited seamlessly from a production- driver company to
customer-driven one. The existing technology was a simple replication of the
manual system .not only did it operate as Individual Island of information but the
technology has outlived its lifetime and was completely obsolete.
ERP attempts to integrate all departments and function across the company on to a
single computer system that can serve all different department needs and also allow
them to have consistent information. Serving the needs of finance, human resource
logistics and warehousing is tall order. Each of them is in reasonably sized company
typically has its own computer system and database.
ERP can play an essential role in:
Driving accurate and fast decisions (product profitability, procurement

spend) with consistently defined data
Running broadly known and supported applications
Harmonizing and optimizing back-office processes across the enterprise that
complies with finance requirements.
Enabling best-practice demand planning for supply-chain processes.
Future-proofing global applications that support global enterprises.
SAP TECHNOLOGY AT TATA STEEL:
SAP Enables seamless remodeling of Tata steel from product driven to customer
driven enterprise of the internet economy.
Post the introduction of sap solution, the results has been terrific .the company has
spent close to 40 crores on SAP implementation, and has already saved 33crores.

Some of the benefits from sap are:
It will lead to complete transparency in customer ledger, orders, stock ledger,

dispatches and credit lines.
It is internet enabled and will allow customer to use sap to get information on
their order
Marketing and sales decision will be made on the basis of data available
online
Lead time required to process orders, settle complaints develop new product
and reconcile accounts, in substantially lesser time.
Online availability of data will further improve inventory management in the
stockyard, leading to better customer service.

CHALLENGES FOR INFORMATION SYSTEMS IN STEEL
INDUSTRY
MORE THAN ONE PLANNING STRATEGY
Steelmakers often use a combination of production planning strategies. Typically

the flat or strip products are make-to-order, whereas the long products are make to-
stock. Depending on the existence of a “de-couple point”, finish-to-order could be a
relevant planning strategy as well. Such a combination of planning strategies
affects the design of most ERP processes, including supply chain processes as well
as the financial/cost control processes. Cost control in make-to-stock tends to go for
standard price approaches, but in a make-to-order environment costing happens on
an individual order cost collection and forecast basis. ERP systems today can handle
this kind of complexity.
COMPLEX PRODUCT VARIATIONS
A steel product is made up of a large number of characteristics, making the product

difficult to configure when entering it in the ERP system. Configuration in the
make-to-order entries is typically done while entering the order, whereas for the
make-to-stock entries, configuration is done in the product definition, that is, on the
“material master”.
This burdens the early discussions during the design phase of an ERP
implementation. Fundamental decisions need to be made very early in the project
about how many (finished product) materials should be defined: one extreme is to
define by material group which needs to be configured completely in the order, or
the other end of the spectrum is to define all possible/feasible characteristic
combinations which can possibly explode into an extremely large number of finished
product definitions.
FLEXIBLE PLANNING
Planning for steelmaking often needs to happen on short notice, with unstable
production processes and unplanned outputs. This requires continuous

reassignment of products to processes and orders dependent on the Characteristics
described above. ERP systems today allow re-assigning flexibly to handle this
situation.
SPECIFIC CUSTOMER SERVICE REQUIREMENTS
To cope with high-demanding customer segments such as automotive and

construction, tight integration with business partners on forecasts, electronic
customer orders (EDI, internet etc.) are typically needed. ERP systems today
support electronic integration with partners.
COMPLEX PRODUCTION SHEDULING COMBING BOTH CONTINIOUS AND

BATCH PRODUCTION
Figure below illustrates the flow in a typical steel mill. While the blast furnace and
converter work in batches, the caster works continuously and the finishing lines
work in batches again.

CURRENT BALANCE SHEET,
PROFIT AND LOSS ACCOUNT
AND COST SHEET OF
TATA STEEL LTD.

BALANCE SHEET OF TATA STEEL LTD. FROM
2005-06 TO 2009-10
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
Share capital & warrants 553.67 727.73 6,203.30 6,203.45 887.41
Reserves & Surplus 9,201.63 13,368.42 21,097.43 23,972.81 36,074.39
Total shareholder's fund 9,755.30 14,096.15 27,300.73 30,176.26 36,961.80
Loan Amount:
Secured 2,191.74 3,758.92 3,520.58 3,913.05 2,259.32
Unsecured 324.41 5,886.41 14,501.11 23,033.13 22,979.88
Total Loans 2,516.15 9,645.33 18,021.69 26,946.18 25,239.20
Deferred Tax 957.00 748.94 681.80 585.73 867.67

Liability(net)
Foreign currency trans.
Or goodwill - - - - 206.95
Provision for employee
separation compensation 1,388.71 1,107.08 1,071.30 1,033.60 957.16
TOTAL FUNDS 14,617.16 25,597.50 47,075.52 58,741.77 64,232.78

EMPLOYED(NET)
Gross Block 16,564.90 18,526.93 20,847.04 23,544.69 26,149.66
(-)Impairment (94.19) (100.41) (100.47) (100.47) (106.07)
(-)Depreciation (6,605.66) (7,385.96) (8,123.01) (8,962.00) (10,037.56)
Net Block(FA) 9,865.05 11,040.56 12,623.56 14,482.22 16,006.03
Investment 4,069.96 6,106.18 4,103.19 42,371.78 44,979.67

Foreign currency trans.
OR goodwill - - - 471.66 -
Current Assets:
Stores and spares parts 442.66 505.44 557.67 612.19 623.76

Stock in trade 1,732.09 1,827.54 2,047.31 2,868.28 2,453.99
Sundry debtors 539.40 631.63 543.48 635.98 434.83

Interest accrued on
investment 0.20 0.20 0.20 - 0.29
Cash and bank balance 288.39 7,681.35 465.04 1,590.60 3,234.14
3,002.74 10,646.16 3,613.70 5,707.05 6,747.01
Loans and Advance 1,234.86 3,055.73 33,348.74 4,578.04 5,499.68
Total Current Assets 4,237.60 13,701.89 36,962.44 10,285.09 12,246.69
(-)Current Liabilities (2,835.99) (3,523.20) (3,855.26) (6,039.86) (6,653.09)
(-)Provisions (972.73) (1,930.46) (2,913.52) (2,934.19) (2,346.52)
Net Current Assets(TCA- 428.88 8,248.23 30,193.66 1,311.04 3,247.08

TCL)
Misc.Expenses 253.27 202.53 155.11 105.07 -
Total Assets(Net) 14,617.16 25,597.50 47,075.52 58,741.77 64,232.78
PROFIT AND LOSS ACCOUNT OF TATA STEEL LTD.

FROM 2005-06 TO 2009-10
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
Income:
Sales and other operating 17,144.22 19,762.57 22,191.80 26,843.73 26,757.80

Income
(-) Excise Duty (1,928.72) (2,210.55) (2,498.52) (2,527.96) (1,735.82)
Other income 254.76 433.67 335.00 308.27 853.79

15,470.26 17,985.69 20,028.28 24,624.04 25,875.77
Expenditure:

Manuf. And other expenses 9,390.54 10,814.77 11,645.24 15,525.99 16,396.00
Depreciation 775.10 819.29 834.61 973.40 1,083.18

(-)Expenditure (other than
interest transferred to (112.62) (236.02) (175.50) (343.65) (326.11)
capital a/c)
Interest 124.51 173.90 878.70 1,152.69 1,508.40

10,177.53 11,571.94 13,183.05 17,308.43 18,661.47
PBT & Exceptional item 5,292.73 6,413.75 6,845.23 7,315.61 7,214.30
(-)Employee seperation (52.77) (152.10) (226.18) - -

scheme
(-)contribution for sports - - (150.00) - -
Exchange gain - - 597.31 - -
Profit before taxes 5,239.96 6,261.65 7,066.36 7,315.61 7,214.30
Taxes:
Current tax 1,579.00 2,076.01 2,252.00 2,173.00 1,998.00
Deferred tax 127.58 (52.51) 108.33 (75.13) 169.50
Fringe benefit tax 27.00 16.00 19.00 16.00 -

Education cess on I.T - - - -
1,733.58 2,039.50 2,379.33 2,113.87 2,167.50
Profit after tax 3,506.38 4,222.15 4,687.03 5,201.74 5,046.80
Balance brought forward
for last year 1,790.21 2,976.16 4,593.98 6,387.46 9,496.70
Balance brought forward
(Hooghly-met coke & - - - - 12.28
power co. LTD. On
amalgamation)
Amount available for
Appropriation 5,296.59 7,198.31 9,281.01 11,589.20 14,555.78
Appropriations:
Proposed dividends 719.51 943.91 1,168.93 1,168.95 709.77

Dividends on conv. - - 22.19 109.45 45.88
Pref.Shares
Tax on Dividend 100.92 160.42 202.43 214.10 122.80
General Reserve 1,500.00 1,500.00 1,500.00 600.00 504.68
Debenture redemption - - - - 400.00

reserve
2,320.43 2,604.33 2,893.55 2,092.50 1,783.13
Balance Carried To Balance 2,976.16 4,593.98 6,387.46 9,496.70 12,772.65
Sheet
COST SHEET
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
Raw material consumed 2368.3 3121.46 3429.52 5709.91 5494.74
Payment and provision for 1351.51 1454.83 1589.77 2305.81 2361.48
employee
Operation and other expenses 4038.71 4647.28 5068.88 6213.58 6813.33
(-)Commission (80.75) (64.71) (52.53) (61.49) (82.17)
(-)Provision for wealth tax (0.80) (0.97) (0.95) (1.00) (1.00)
Freight and handling charges 1004.32 1117.45 1098.19 1251.23 1357.27
Excise duty 76.11 93.63 38.5 -32.75 81.13
Depreciation 775.1 819.29 834.61 973.4 1083.18
PRIME COST 9532.5 11188.3 12006 16358.7 17107.96
Adjustment of WIP
(+) Opening stock of WIP 32.42 23.93 28.94 71.48 73.17
(-) Closing stock of WIP (23.93) (28.94) (71.48) (73.17) (158.65)
FACTORY COST 9540.99 11183.3 11963.5 16357 17022.48
Adjustment of finished goods
(+)Opening stock of finished 887.22 1000.62 1078.08 1074.27 1361.85
goods
(+) Purchase of finished goods 656.08 450.6 446.95 358.87 169.08
(-)Closing stock of finished (1000.60) (1078.08) (1074.30) (1361.90) (1141.40)
goods
COST OF PRODUCTION 10083.7 11556.4 12414.2 16428.3 17412.01
Other income (254.76) (433.67) (335.00) (308.27) (853.79)
Provision of debt and advances 6.49 11.99 12.16 8.61 (16.00)
Expenditure (Other than (112.62) (236.02) (175.50) (343.65) (326.11)
interest)

Provision for wealth tax 0.8 0.97 0.95 1 1
Net finance charges 118.44 268.16 671.73 1152.69 1508.4
commission to selling agents 80.75 64.71 52.53 61.49 82.17
COST OF GOODS SOLD 9922.77 11232.5 12641.1 17000.2 17807.68
PROFIT BEFORE TAX 5292.73 6319.49 7052.2 7315.61 7214.3
NET SALES 15215.5 17552.02 19693.3 24315.8 25021.98
CALCULATION OF CURRENT ASSETS AND LIABILITY

PARTUCULAR 2005-06 2006-07 2007-08 2008-09 2009-10
CURRENT ASSETS:
stores and spares 442.66 505.44 557.67 612.19 623.76
stock in trade 1732.09 1827.54 2047.31 2868.28 2453.99
sundry debtors 539.4 631.63 543.48 635.98 434.83
interest accrued on investment 0.2 0.2 0.2 0 0.29
cash and bank balances 288.39 455.41 465.04 1590.6 3234.14
loans and advances 1234.86 3055.73 3022.62 4330.43 3628.28
TOTAL(CA) 4237.6 6475.95 6636.32 10037.48 10375.29
CURRENT LIABILITIES:
sundry creditors 2534.03 3145.99 3243.42 3842.78 4086.65
subsidiary companies 62.37 102.61 115.74 1358.12 1514.3
interest accrued but not due 24.29 47.11 231.05 506.68 676.66
advances received from the
customers 185.07 198.28 226.03 297.37 334.99
liability towards investors
education and protection fund 30.23 29.21 39.02 34.91 40.49
provision for retiring gratuities 0.81 49.31 0 0 0
provision for employee benefits 0 470.19 848.54 1143.08 1127.5
provision for taxation 250.04 448.68 854.74 493.59 507.13
provision for fringe benefits 2.37 18.37 19.12 19.12 2.12
proposed dividend 719.51 943.91 1191.12 1278.4 709.77
TOTAL (CL) 3808.72 5453.66 6768.78 8974.05 8999.61

FINANCIAL RATIO
ANALYSIS OF TATA STEEL

1. RAW MATERIAL CONVERSION PERIOD
This ratio shows how many days are used for manufacturing raw materials.
Formula:
Average stock of raw material x 365

Total raw material consumed
Where average stock of raw material = (Op. stock of raw mat + Cl. Stock of raw mat)/2
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Opening stock of raw material 603.7 707.54 720.52 901.56 1433.26
Closing stock of raw material 707.54 720.52 901.56 1433.26 1153.94
Average stock of raw material 655.62 714.03 811.04 1167.41 1293.6
Total raw material consumed 2368.3 3121.46 3429.52 5709.91 5494.74
RAW MATERIAL 101.4 83.4 86.31 74.63 85.93
CONVERSION PERIOD(IN
DAYS)
RAW MATERIAL CONVERSION PERIODS (IN

DAYS)
150
100
RAW MATERIAL CONVERSION
50 PERIODS (IN DAYS)
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
If we look towards for the year 2004-05, then we can easily observe that, the raw material
conversion period is too high than the year 2010-09. This trend is showing that the period
for conversion of raw material is decreasing year by year. It very good sign for the
company. Because as soon as raw material is used for production the storing cost will be
less. So this chart is showing how efficiently TATA steel is reducing its storing cost and how
fast raw material is used for production.

2. WORK IN PROGRESS CONVERSION PERIOD
This ratio shows in how many days the WIP is converted into finished products.
To find out this ratio, the formula is;
Average stock of work-in-process x 365

Cost of production
Where average stock of WIP = (Op. stock of WIP+ Cl. Stock of WIP)/2
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Opening stock of WIP 32.42 23.93 28.94 71.48 73.17
Closing stock of WIP 23.93 28.94 71.48 73.17 158.65
Average stock of WIP 28.18 26.44 50.21 72.325 115.91
Cost of production 11470 13300.2 14423.5 18917.71 17124.8
WIP CONVERSION PERIOD(IN 0.89 0.72 1.27 1.39 2.47
DAYS)
WIP CONVERSION PERIOD(IN DAYS)

3
2.5
2
1.5 WIP CONVERSION PERIOD(IN
DAYS)
1
0.5
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
As we can see in the chart that WIP converted into finished product within a day in the year
2004-05 to 2006-07. But in recent year it is taking more than one day. If we measure this chart,
we can say that the efficiency level of TATA steel is reducing year by year to convert WIP to
finished goods.

3. FINISHED GOODS CONVERSION PERIOD
It refers to the time in which the finished goods are converted into sales or in other way we can
say that the time period between production and sales when the finished goods kept in the ware
house before the actual sale is made.
So formula for FGCP is;
Average stock of finished goods x 365

Cost of goods sold
Where average stock of finished goods = (Op. stock of finished goods +Cl. Stock of finished
goods)/2
Particulars
2005-06 2006-07 2007-08 2008-09 2009-10
Opening stock of finished goods 887.82 1000.62 1078.08 1074.27 1361.85
Closing stock of finished goods 1000.62 1078.08 1074.27 1361.85 1141.4
Average stock of finished goods 944.22 1039.35 1076.18 1218.06 1251.62
Cost of goods sold 12012.39 13673.31 14874.23 18989 17140.09
FINISHED GOODS CONVERSION 28.69 27.7 26.4 23.41 26.65
PERIOD(IN DAYS)
FINISHED GOODS CONVERSION PERIOD(IN

DAYS)
35
30
25
20 FINISHED GOODS
15 CONVERSION PERIOD(IN
10 DAYS)
5
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
From the table and the chart we can easily observed that, though in the year 2005-06 the
conversion period increased than the year 2004-05. But fortunately the recession period couldn’t
hit the sales for the year 2006-07 to 2010-09. The finished goods were converted into sales even
less than only 25 days in the year 2010-09. It shows the efficiency of not only quality of the steel
but also the efficiency of marketing department of TATA steel.

4. RAW MATERIAL TO CURRENT ASSETS
It indicates the percentage of raw materials in the current asset of the company.
To find out this;
Raw material(closing) x 100

Current asset
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10
Raw material(Closing) 707.54 720.52 901.56 1433.26 1153.94
Current assets 4237.6 6475.95 6636.32 10037.48 10375.29
RAW MATERIAL TO CURRENT ASSETS 16.69 11.13 13.58 14.27 11.12
RAW MATERIAL TO CURRENT ASSETS

20
15
10 RAW MATERIAL TO CURRENT

ASSETS
5
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
This chart and table can show the one unexpected downfall in the year 2006-07, which is less
than 6%. If we observe carefully then we can see that, in the year 2006-07, the raw material trend
is nearly same to other years, but due to huge cash in hand increase the current asset. Which
reduce the percentage of raw material to current asset?

5. FINISHED GOODS TO CURRENT ASSET
It indicates the percentage of finished goods in the current assets of the company. Finished goods
are such a component of the current assets which can be easily converted into cash.
So the formula is;
Finished goods(closing) x 100

Current asset
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Finished goods(Closing) 1000.62 1078.08 1074.27 1361.85 1141.4
Current asset 4237.6 6475.95 6636.32 10037.48 10375.29

FINISHED GOODS TO CURRENT 23.61 7.86 16.81 13.55 16.91
ASSETS
FINISHED GOODS TO CURRENT ASSETS

25
20
15
FINISHED GOODS TO CURRENT
10 ASSETS
5
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
As we saw in the raw material to current assets, which is same as finished goods to current
assets. Due to huge amount of cash held in the year 2006-07, the percentage of finished goods is
lesser than the other years. But in the year 2005-06 it is near to 25%. But the percentage is going
downwards in the year 2010-09, which is less than 15%.

6. AVERAGE INVENTORY TURNOVER RATIO
It indicates the percentages of inventory with gross sales.
The formula is;
Average inventory x 100

Gross sales
Where average inventory = (Op. inventory+ Cl. Inventory)/2
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Opening inventory 1532.34 1732.09 1827.54 2047.31 2868.28
Closing inventory 1732.09 1827.54 2047.31 2868.28 2453.99
Average inventory 1632.22 1779.82 1937.43 2457.8 2661.13
Gross sales 17144.22 19762.57 22191.8 26843 24315.77
AVERAGE INVENTORY 9.5 9 8.73 9.15 10.94
TURNOVER RATIO
AVERAGE INVENTORY TURNOVER RATIO

12
10
8
6 AVERAGE INVENTORY
4 TURNOVER RATIO
2
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
As we can observe that, the trend is showing nearly constant, except the year 2004-05. The
inventory level is increasing as well as the gross sales. It shows the constant growth of sales and
inventory.

7. STOCK TURNOVER RATIO
Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet
the requirements of the business. But the level of inventory should neither be too high nor too
low.
The stock turnover ratio measures the number of times a company sells its inventory during the
year.
The formula for stock turnover ratio is;
Cost of goods sold

Average stock
Where average stock = (Op. inventory+ Cl. Inventory)/2
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Cost of goods sold 12012.39 13673.31 14874.23 18989 17140.09
Average stock 1632.22 1779.82 1937.43 2457.8 2661.13
STOCK TURNOVER 7.37 7.68 7.67 7.72 6.44
RATIO
STOCK TURNOVER RATIO

8
7.5
6.5 STOCK TURNOVER RATIO
5.5
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
As we can find out that in the year 2004-05 the ratio was very high as compare to other years.
In the year 2005-06 it is even less than 7.5, but after that TATA steel maintained the consistency
on its growth.

8. INVENTORY CONVERSION PERIOD
This ratio shows in how many days inventories are converted into sales. It is major ratio analysis
for cash conversion period. Because it is the first component of the cash conversion period.
The formula is;
Inventories(closing)
Sales/365
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Inventories(Closing) 1732.09 1827.54 2047.31 2868.28 2453.99
Sales 15139.39 17551.09 19693.28 24315.77 25021.98
INVENTORY 41.75 38 37.94 43.05 35.79
CONVERSION PERIOD
INVENTORY CONVERSION PERIOD

50
40
30
INVENTORY CONVERSION
20 PERIOD
10
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
From this chart we can observed that in the year 2007-08 and 2006-07, the inventory was most
efficiently converted into sales. But unfortunately it is very high in the year 2010-09. So it shows
the inefficiency for the company.

9. CURRENT RATIO
This ratio is used to judge the short term solvency of a company and is worked out by dividing
the aggregate Current Assets by its aggregate Current Liabilities.
To find out the current ratio, the formula is;
Current assets
Current liability
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Current assets 4237.6 6475.95 6636.32 10037.48 10375.29
Current liability 3808.72 5453.66 6768.78 8974.05 8999.61
CURRENT RATIO 1.11 1.18 0.98 1.11 1.15
CURRENT RATIO
1.5
CURRENT RATIO
0.5
0
2005-06 2006-07 2007-08 2008-09 2009-10
ANALYSIS:
In the year 2006-07 this ratio is too high due to huge amount cash held in the company. From
here we can say that company has huge liquidity but in other sense we can say that company
blocked this huge amount of cash without investing. Again it is very good sign for the company,
because the recession hit the world in the year 2007-08 and company has huge amount of
liquidity to face the crisis moment. Again we can see that the in the year 2007-08 the ratio is
even less than 1. So 2006-07 heavy cash amount saved in the year 2007-08. Rest of the year
maintained the consistency, which is just above 1.

COMPANY OVERVIEW OF
JINDAL STEEL WORKS LTD.
AND SAIL

JINDAL STEEL AND WORKS
In the world of business, the Jindal Organization is a celebrity.

Ranked sixth amongst the top Indian Business Houses in terms of
assets, the Group today is a US $10 Billion conglomerate.
Jindal Organization, set up in 1970 by the steel visionary Mr. O.P.

Jindal, has grown from an indigenous single-unit steel plant in
Hisar, Haryana to the present multi-billion, multi-location and multiproduct steel conglomerate.
The organization is still expanding, integrating, amalgamating and growing. New directions, new
objectives... but the Jindal motto remains the same- "We are the Future of Steel ".
The group has been technology-driven and has a broad product portfolio. Yet, the focus at Jindal
has always been steel. From mining of iron-ore to the manufacturing of value added steel
products, Jindal has a pre-eminent
position in the flat steel segment in
India and is on its way to be a major
global player, with its overseas
manufacturing facilities and strategic
manufacturing and marketing alliances
with other world leaders.
Jindal Organization aims to be a global

player. In pursuance of its objectives, it
is committed to maintain world-class
quality standards, efficient delivery
schedules, competitive price and excellent after sales service.

FINANCIAL DATA OF JINDAL STEEL
BALANCE SHEET:
Particulars 31/03/05 31/03/06 31/03/07 31/03/08 31/03/09
Sources of funds:
Owner's fund
Equity share capital 15.4 15.4 15.4 15.4 15.47
Preference share capital 1 - - - -
Reserves & surplus 1,302.98 1,829.31 2,481.33 3,740.98 5,399.85
Loan funds:
Secured loans 1,159.51 1,780.77 2,115.61 1,783.39 2,105.49
Unsecured loans 336.35 964.6 1,392.11 2,079.96 2,857.16
Total 2,815.24 4,590.08 6,004.45 7,619.73 10,377.97
Uses of funds:-
Fixed assets:
Gross block 2,530.28 3,243.05 4,929.03 5,918.94 7,362.90
Less : accumulated depreciation 361.76 542.33 781.75 1,183.11 1,617.00
Net block 2,168.53 2,700.72 4,147.28 4,735.83 5,745.90
Capital work-in-progress 345.7 1,146.27 937.84 660.48 2,318.01
Investments 33.38 430.3 709.82 1,036.19 1,233.40
Total 4,716.13 6,978.01 9,942.22 11,168.33 15,043.21
Net current assets:
Current assets, loans & advances 1,036.30 1,490.50 1,801.66 3,299.57 5,189.28
Less : current liabilities & provisions 769.67 1,178.45 1,595.39 2,115.48 4,111.64
Total net current assets 266.62 312.05 206.27 1,184.09 1,077.64
Miscellaneous expenses not written 1.01 0.74 3.24 3.14 3.02
Total 2,815.24 4,590.08 6,004.45 7,619.73 10,377.97

PROFIT AND LOSS ACCOUNT:
Particulars 2005-06 2006-07 2007-08 2008-09
Income:
Operating income 2565.04 3523.08 5368.14 7677.83
Expenses:
Material consumed 536.71 1,068.50 1,727.40 3,419.42
Manufacturing expenses 545.44 510.96 670.87 773.84
Personnel expenses 79.74 90.14 132.2 181.46
Selling expenses 222.18 276.47 264.73 327.76
Administrative expenses 148.16 167.2 277.03 337.49
Cost of sales 1,532.23 2,113.27 3,072.23 5,039.97
Operating profit 1,032.81 1,409.81 2,295.91 2,637.86
Other recurring income 26.02 36.08 57.31 199.46
Adjusted PBDIT 1,058.83 1,445.89 2,353.22 2,837.32
Financial expenses 108.02 173.19 243.02 267.89
Depreciation 219.17 336.47 451.51 433.03
Other write offs 0.27 0.27 0.27 0.2
Adjusted PBT 731.37 935.96 1,658.42 2,136.20
Tax charges 154.91 241.85 265.55 465.4
Adjusted PAT 576.46 694.11 1,392.87 1,670.80
Non recurring items (12.00) 7.78 (144.57) (144.78)
Other non cash adjustments 8.48 1.1 (11.34) 10.46
Reported net profit 572.94 702.99 1,236.96 1,536.48
Earnigs before appropriation 1,528.77 2,136.05 3,239.54 4,584.28
Equity dividend 46.19 55.43 62.02 85.33
Dividend tax 6.48 8.87 10.55 -
Profit carried to balance sheet 1,476.10 2,071.75 3,166.97 4,498.95

STEEL AUTHORITY OF INDIA:
Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully
integrated iron and steel maker, producing both basic and special steels for
domestic construction, engineering, power, railway, automotive and defense
industries and for sale in export markets.
Ranked amongst the top ten public sector companies in India in terms of turnover,
SAIL manufactures and sells a broad range of steel products, including hot and
cold rolled sheets and coils, galvanised sheets, electrical sheets, structural, railway
products, plates, bars and rods, stainless steel and other alloy steels. SAIL
produces iron and steel at five integrated plants and three special steel plants, located principally in the
eastern and central regions of India and situated close to domestic sources of raw materials, including the
Company's iron ore, limestone and dolomite mines. The company has the distinction of being India’s
second largest producer of iron ore and of having the country’s second largest mines network. This gives
SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are
inputs for steel making.
SAIL's wide range of long and flat steel products are much in demand in
the domestic as well as the international market. This vital responsibility
is carried out by SAIL's own Central Marketing Organisation (CMO) that
transacts business through its network of 37 Branch Sales Offices spread
across the four regions, 25 Departmental Warehouses, 42 Consignment
Agents and 27 Customer Contact Offices. CMO’s domestic marketing
effort is supplemented by its ever widening network of rural dealers who
meet the demands of the smallest customers in the remotest corners of
the country. With the total number of dealers over 2000, SAIL's wide
marketing spread ensures availability of quality steel in virtually all the
districts of the country.
SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO,
undertakes exports of Mild Steel products and Pig Iron from SAIL’s five integrated steel plants.
With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's
Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which
helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its
own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and

Safety Organization at Ranchi. Our captive mines are under the control of the Raw Materials Division in
Kolkata. The Environment Management Division and Growth Division of SAIL.
BALANCE SHEET:
Rs in crore
Particulars 31/03/05 31/03/06 31/03/07 31/03/08 31/03/09

Sources of funds
Owner's fund
Equity share capital 4,130.40 4,130.40 4,130.40 4,130.40 4,130.40
Reserves & surplus 6,176.25 8,471.01 13,182.75 18,933.17 23,853.70
Loan funds
Secured loans 1,603.98 1,122.16 1,556.39 925.31 1,473.60
Unsecured loans 4,165.81 3,175.46 2,624.13 2,119.93 6,065.19
Total 16,076.44 16,899.03 21,493.67 26,108.81 35,522.89
Uses of funds
Fixed assets
Gross block 28,043.48 29,360.46 29,912.71 30,922.73 32,728.69
Less : accumulated 15,558.41 17,198.32 18,315.00 19,351.42 20,459.86
depreciation
Net block 12,485.07 12,162.14 11,597.71 11,571.31 12,268.83
Capital work-in-progress 366.48 757.94 1,236.04 2,389.55 6,544.24
Investments 606.71 292 513.79 538.2 652.7
Net current assets
Current assets, loans & 15,521.37 18,788.80 21,673.75 27,309.01 35,666.84
advances
Less : current liabilities & 13,198.12 15,317.67 13,656.77 15,758.74 19,609.72
provisions
Total net current assets 2,323.25 3,471.13 8,016.98 11,550.27 16,057.12
Miscellaneous expenses 294.93 215.82 129.15 59.48 -

not written
Total 16,076.44 16,899.03 21,493.67 26,108.81 35,522.89

PROFIT AND LOSS ACCOUNT:
Particulars 2005-06 2006-07 2007-08 2008-09

Income:
Operating income 28,200.48 34,328.77 39,958.67 43,798.58
Expenses
Material consumed 13,903.23 15,963.13 16,821.39 22,042.58
Manufacturing expenses 2,793.45 2,925.43 3,317.74 3,762.77
Personnel expenses 4,156.97 5,087.76 7,919.28 8,401.73
Selling expenses 1,108.12 1,066.73 1,143.90 935.68
Administrative expenses 1,035.99 1,064.29 1,321.44 1,644.78
Expenses capitalized -1,352.05 -1,423.08 -1,832.22 -1,930.40
Cost of sales 21,645.71 24,684.26 28,691.53 34,857.14
Operating profit 6,554.77 9,644.51 11,267.14 8,941.44
Other recurring income 892.3 1,354.96 1,539.69 2,279.89
Adjusted PBDIT 7,447.07 10,999.47 12,806.83 11,221.33
Financial expenses 467.76 332.13 250.94 253.24
Depreciation 1,207.30 1,211.48 1,235.48 1,285.12
Other write offs 181.44 128.59 75.49 128.02
Adjusted PBT 5,590.57 9,327.27 11,244.92 9,554.95
Tax charges 1,694.36 3,253.80 3,934.65 3,284.28
Adjusted PAT 3,896.21 6,073.47 7,310.27 6,270.67
Nonrecurring items 45.64 53.75 161.9 -277.12
Other non cash adjustments 71.12 60.57 64.61 181.26
Reported net profit 4,012.97 6,187.79 7,536.78 6,174.81
Earnings before appropriation 7,861.47 12,886.63 18,348.43 22,052.47
Equity dividend 826.08 1,280.42 1,528.25 1,073.90
Dividend tax 115.86 197.98 258.91 181.26
Profit carried to balance sheet 6,919.50 11,408.20 16,561.30 20,797.30

RATIOS COMPARISION BETWEEN THREE COMPANIES:
Ratio analysis TATA JINDAL SAIL
Raw material to current asset 11.12 17.3 8.83
Finished goods to current asset 16.91 17.02 33.45
Stock turnover ratio 6.44 7.77 5.08
Inventory conversion period 35.79 53.49 85.61
Current ratio 1.15 0.61 2.01
It will easy to understand when it will put into chart. So, all the necessary charts are given below.
ANALYSIS:
If we compare for TATA STEEL with other companies, then we can see that TATA STEEL’s raw material
to current asset is neither too high nor too low. It is maintaining a required amount of raw material in
hand.

ANALYSIS:
Here we can see that SAIL is playing a defensive role in case of finished goods. But still TATA steel has
limited finished goods to sell. TATA STEEL never tried to block its capital.
ANALYSIS:
Both TATA STEEL and JINDAL STEEL have the good stock turnover ratio. In this case TATA STEEL is far
ahead than SAIL.

ANALYSIS:
Inventory conversion period is lowest than other company for TATA STEEL. So from here we can
conclude TATA STEEL is the fastest converter company for Inventory.
ANALYSIS:
Current ratio of TATA STEEL is in standard position. Where JINDAL steel’s current ratio is less than 1 and
SAIL’s current ratio is more than 2. Where SAIL is blocking its working capital there TATA STEEL is
keeping appropriate coverage for current liability.

PRESENTATION OF
INVENTORY OF TATA
STEEL

PRESENTATION OF INVENTORY IN A MANNER WHICH IS USEFUL TO
THE MANAGEMENT AND MIS REPORT RELATING TO INVENTORY
MANAGEMENT:
As we know there are different types of inventory in a company. They are:

-RAW MATERIALS
-WORK IN PROGRESS
-SEMI FINISHED AND FINISHED PRODUCTS
-STORES AND SPARES INVENTORY
These are the inventory heads which are maintained by TATA STEEL. Over here I have
represented of all inventories segregated each of them in Product and Location wise
SEMI FINISHED /FINISHED PRODUCTS
LOCATION
WORKS 484.9
COLD ROLLING COMPLEX-EAST 266.17
MARKETING 213.54
INTERNATIONAL TRADE 12.47
WRM(WEST) 24.01
SECONDARY PRODUCTS 144
TUBES 90.43
AGRICO 11.33
BEARINGS 38.38
WIRE DIVISION 52.9
COLD ROLLING COMPLEX-WEST 23.71
TOTAL 1361.84

PRODUCT
FLAT 348.56
LONG 211.26
CR 256.39
SOS 99.91
SCRAP AT WORK 148.99
OTHERS 295.89
TOTAL 1361.84
RAW MATERIALS
PRODUCT
COAL 494.71
COKE 212.52
IRON ORE 162.09
LIMESTONE 35.79
DOLOMITE 2.24
ANTHRACITE 0.1
ALUMINIUM 1.6
NICKLE,COPPER AND SULPHUR 0.86
FERRO MANAGANESE 9.6
SILICO MANGANESE 5.77
FERRO SILICON 0.8
FERRO MOLYBDENUM 0.46
FERRO CHROME 52.74
STOCK AT HIGH SEAS 161.99
IN TRANSIT 0.85
MIDDLINGS 2.31
CHROME ORE 149.39
TAILINGS 25.87
ZINC 8.85
TUBES 5.04
WIRE 2.02
TIN 7.44
OTHERS 90.25
TOTAL 1433.29

LOCATION
WORKS 964.27
MINES 69.79
COLLIERIES 13.02
TAILINGS AT WBC AND JHARIA 25.87
FAMD DIVISION 336.97
CRM(ZINC) 8.85
TUBES DIVISION 5.04
WIRE DIVISION 2.02
TCIL(TIN) 7.44
TOTAL 1433.27
STORES AND SPARES INVENTORY OTHER DIVISIONS
WORKS (INCL.CRM) 424.7

UNDER WORKS DEPT 63.81
TOWN,MEDICAL,ENGG 0.55
MINES AND COLLIERIES 50.24
WRM-WEST 2.45
TUBES 24.52
FAMD 8.71
WIRE DIVISION 1059
BEARINGS 6.04
GROWTH SHOP 15.9
COLD ROLLING COMPLEX-WEST 4.58
AGRICO 0.11
TOTAL 611.39

Finding and recommendations
Findings
During project work I got lots of information regarding inventory management for steel
division and the information put forward the project.
 Major types of inventory in Tata steel are raw material, work-in-progress, finished
goods and spare parts.
 Tata steel inventory management uses ABC analysis and for spare planning VED
classification is used.
 Weighted average method is used for pricing in inventory.
 Tata steel has adopted strategic sourcing concept. Using this, organization is
achieving a substantial amount of savings through the adoption of different techno-
commercial, cost effective measures and leveraging the knowledge.
 The inventory ratio shows the efficient and effective inventory management by Tata
steel because it is able to reduce inventory level year by year.
 Value of inventory has increased inventory in terms’ of rupees but decreased in

tones because of increase in cost of raw material.
 Standard costing is used by Tata steel for accounting of inventories.
 The organizations efficient labor force and efficient utilization of material

contributed to take less time to clear the stock.
 Tata steel follows the theory of constraint.

Recommendation
After going through all the information collected and ratios calculations
I would go for the following recommendations:
 Company should consider the raw material conversion period and according to
demand should produce so that the conversion period is much less and hence cost
associated with it can be reduced.
 Inventory turnover for Tata steel is much less as competitors. The company should
see for the reason and improve to capture the market.
 Supply chain management of Tata steel should be improved to reduce inventory

level.
 Training on SAP usage should be imparted to minimize user errors, if all users know
how the complete system works.
 Retail shop of steel product like steel junction should opened in prime location to
increase sales.
 Finished goods holding inventory should reduced.

BIBLIOGRAPHY
Annual reports
 Tata steel
 Jindal steel
 Steel authority of India
Books
 Financial management By I.m.pandey
 Inventory managemebnt and working capital- by p.Gopal Krishnan
 Cost caccountiug
WEBSITES
WEBSIwww.moneycontrol.com
www.tatasteel.com
www.sail.co.in
www.Jindalsteelpower.com
www.google.com

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“IN PARTIAL FULLFILMENT FOR THE COURSE OF MBA”

JAMSHEDPUR WOMENS COLLEGE

TATA STEEL (JWC) Page 1

This is the work, which is done by me under the guidance and

Name: Rinky Kumari

Date: 16th July, 2011

Place: Tata steel, Jamshedpur Signature:

TATA STEEL (JWC) Page 2

Learning is the beginning of wealth.

Learning is the beginning of health.

Learning is the beginning of spiritually.

Searching and learning is where the miracle process all begins.

TATA STEEL (JWC) Page 3

But some other aims are as follows:

To carry out a critical analysis of Tata steel (steel division) inventory

The objectives of the project are:-

To understand the concept of inventory management and its management

The projects concludes with major finding and recommendations.

TATA STEEL (JWC) Page 4

TATA STEEL (JWC) Page 5

TATA STEEL (JWC) Page 6

TATA STEEL (JWC) Page 7

TATA STEEL (JWC) Page 8

TATA STEEL (JWC) Page 9

for the surging demand for 0

Policy has forecasted the

TATA STEEL (JWC) Page 10

SOME OF THE LEADING COMPANIES IN INDIAN STEEL INDUSTRY ARE:

TATA STEEL (JWC) Page 11

THREAT OF NEW ENTRANTS:

BARGAINING POWER OF SUPPLIERS :

BARGAINING POWER OF BUYER :

TATA STEEL (JWC) Page 12

TATA STEEL (JWC) Page 13

TATA STEEL (JWC) Page 15

TATA STEEL (JWC) Page 16

Award for Excellence in knowledge:-

Award for excellence in corporate Social Responsibility (CSR):-

TATA STEEL (JWC) Page 17

He was a visionary behind Tata Steel .He realized that

SIR DORABJI TATA (1859 – 1933)

Sir Dorabji Tata(1859-1933) carried out the bequest with

J. R. D. TATA (1904 – 1993)

TATA STEEL (JWC) Page 18

RATAN NAVAL TATA

Ratan Navel Tata was born on December 28, 1937, in

Tata was born into wealthy and famous family of

TATA STEEL (JWC) Page 19

Mr. Ratan N. Tata Chairman

Mr. B. Muthuraman Vice Chairman

Mr. Nusli N. Wadia Company Director

Mr. Iahaat Hussain Board Member

Mr. Subodh Bhargava Board Member

Mr. Jacobus Schraven Non-Executive Independent Director

Dr. Jamshed J. Irani Board Member

Mr. Andrew Robb Non-Executive Independent Director

Mr. S. M. Palia Company Director

Mr. Suresh Krishna Financial Institutions Nominee

Mr. H.M. Nerurkar Managing Director, Tata Steel Limited

Tata Steel Group Senior Management

Kirby Adams Managing Director & CEO, Tata Steel Europe