COMPETITIVE ANALYSIS

With a crude steel output of 9.8 MT in October 2021, India was the world's second-largest producer. In
FY21, crude steel and finished steel output were 102.49 MT and 94.66 MT, respectively. Due to
increased consumer demand, India's crude steel production is expected to increase by 18% in FY22,
reaching 120 million tonnes. In FY21, finished steel consumption totaled 93.43 MT. The total amount of
finished steel consumed between April and September 2021 was 49.11 MT. Domestic availability of raw
materials such as iron ore and low-cost labor have fueled India's steel industry's rise. As a result, India's
steel industry has been a major contributor to the country's manufacturing output.

The Indian steel sector is cutting-edge, it has always aimed to keep older facilities up to date and
upgrade them to better energy efficiency levels. Tata Steel's major competitors include ArcelorMittal,
Jindal Steel and Power, JSW Steel, SAIL and VISA Steel. Here, we have shown the quantitative analysis of
JSW Steel and SAIL as compared to Tata Steel.

JSW Steel

The JSW Group's primary company is JSW Steel. The business is a leading integrated steel producer. It is
currently one of India's fastest growing firms, with operations in over 100 countries. JSW is also the first
firm in its automotive categories to produce high-strength and advanced high-end steel products.

The firm, which has the largest steel product portfolio, is also India's largest steel exporter, delivering to
over 100 countries on five continents. It has the capacity to generate 18 MTPA through factories in
Karnataka, Tamil Nadu, and Maharashtra. Now, as the company ramps up production plans, it expects to
reach the 40 MTPA threshold in ten years.

When the total asset turnover ratio and the inventory turnover ratio of JSW is compared to Tata Steel, it
is seen that in terms of asset utilization, Tata Steel was doing better and in terms of sales generation
from inventory, JSW Steel was doing better. The inventory holding period increased for JSW Steel while
it decreased for Tata Steel by 10% which means that Tata Steel is better at it. When it comes to
collecting debts from customers, JSW Steel is doing better since its debtor’s turnover ratio increased by
6% while for Tata Steels, it decreased by 71%. The liquidity ratios witnessed different trends for the two
companies. On one hand, the current ratio and quick ratio increased for Tata Steel while on the other,
these ratios decreased for JSW Steel. Through the liquidity ratios, we find that Tata Steel has better
liquidity and is financially healthier than JSW Steel given that the differences in the FY 2021 and its
previous year show that the liquidity state is becoming better for Tata Steel. The material expense ratio
was considerably high in 2020 and reduced for JSW Steel but is still higher (39.69% in 2021) than Tata
Steel (25.40% in 2021). This makes Tata Steel’s ability in managing its fund more efficient. There is an
increase in net profit margin for both the companies.
Employee expense ratio of Tata Steel is almost 4 times that of JSW Steel and the other expense ratio is
also higher of Tata Steel when compared to JSW Steel. JSW Steel’s expenditure on employees and other
expenses as a percentage of sales is lower which is a good sign. Fixed assets to long term Debt in case of
JSW Steel has dropped but Tata Steel has seen an increase of 11.21% which is not a good sign.
The interest coverage ratio of both the companies has increased but Tata Steel has seen a tremendous
rise in the year (18.44 times in the year ending 2021) which means it is in a much better position than
JSW Steel (6.11 times in the year ending 2021) in meeting its interest payments on a timely basis.
SAIL
Steel Authority of India Limited (SAIL) is India's largest steel producer and one of the country's seven
Maharatna Central Public Sector Enterprises.
The company's five integrated facilities and three special steel plants, which are primarily located in
India's eastern and central regions and are near to domestic raw material sources, produce iron and
steel. SAIL produces and distributes a wide variety of steel products. In FY20, SAIL mined 32.40 million
tonnes of iron ore, fluxes, and coal. It earned a net profit of Rs 3682 crores in the year ending
March,2021 with a net sales of Rs 69113 crores. Steel Authority of India Ltd. (SAIL) stated in August 2021
that it would spend Rs. 4,000 crore (US$ 536.47 million) in Jharkhand over the next three years to
expand capacity at its Gua mines.
For the fourth quarter of FY21, SAIL recorded a 5.6 percent increase in crude steel production.
Production was 4.55 million tonnes, up from 4.31 million tonnes in the same period of FY20.
The return on equity provided by SAIL in FY22 was 9.3% which was less than the return of 10.19%
provided by Tata Steel. Both the companies have a pb ratio of 1.8(Tata steel) and 1.02(SAIL). This tells us
that the share price is almost fairly valued for both the companies which is a good sign. The year on year
performance of Tata Steel has improved by 78.20% whereas a significant improvement of 95.22% can be
seen in case of SAIL which gives a slight advantage to it. When the total asset turnover ratio of SAIL is
compared to Tata Steel, it is seen that in terms of asset utilization, Tata Steel was doing better. The
liquidity ratios witnessed different trends for the two companies. On one hand, the current ratio and
quick ratio increased for Tata Steel while on the other, these ratios decreased for SAIL. Through the
liquidity ratios, we find that Tata Steel has better liquidity and is financially healthier than JSW Steel
given that the differences in the FY 2021 and its previous year show that the liquidity state is becoming
better for Tata Steel. There is an increase in net profit margin for both the companies.
The interest coverage ratio has increased for both the companies. It has seen a tremendous rise in the
year (18.44 times in the year ending 2021) which means it is in a much better position than SAIL(3.37
times in the year ending 2021) in meeting its interest payments on a timely basis.