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TATA STEEL ANALYSIS

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TATA STEEL ANALYSIS OF FINANCIAL STATEMENT OF LAST 5 YEARS..

TATA STEEL ANALYSIS OF FINANCIAL STATEMENT OF LAST 5 YEARS..

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  • 1. 114300-342900Introduction
    Backed by 100 glorious years of experience in steel making, Tata Steel is among the top ten steel producers in the world with an existing annual crude steel production capacity of 30 Million Tonnes Per Annum (MTPA). Established in 1907, it is the first integrated steel plant in Asia and is now the world`s second most geographically diversified steel producer and a Fortune 500 Company.
    Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian markets, with manufacturing units in 26 countries.
    It was the vision of the founder; Jamsetji Nusserwanji Tata., that on 27th February, 1908, the first stake was driven into the soil of Sakchi.  His vision helped Tata Steel overcome several periods of adversity and strive to improve -133350468630against all odds.
    Tata Steel`s Jamshedpur (India) Works has a crude steel production capacity of 6.8 MTPA which is slated to increase to 10 MTPA by 2010.
    The Company also has proposed three Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh in India with additional capacity of 23 MTPA and a Greenfield project in Vietnam.
    Through investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a manufacturing and marketing network in Europe, South East Asia and the pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in 2008, has operations in the UK, the Netherlands, Germany, France, Norway and Belgium.
    Tata Steel Thailand is the largest producer of long steel products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5 MTPA mini blast furnace project in Thailand. NatSteel Holdings produces about 2 MTPA of steel products across its regional operations in seven countries.
    Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market.
    The iron ore mines and collieries in India give the Company a distinct advantage in raw material sourcing. Tata Steel is also striving towards raw materials security through joint ventures in Thailand, Australia, Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed an agreement with Steel Authority of India Limited to establish a 50:50 joint venture company for coal mining in India. Also, Tata Steel has bought 19.9% stake in New Millennium Capital Corporation, Canada for iron ore mining.
    Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferro-chrome plant in South Africa and setting up of a deep-sea port in coastal Orissa are integral to the Growth and Globalisation objective of Tata Steel.
    Tata Steel’s vision is to be the global steel industry benchmark for Value Creation and Corporate Citizenship.
    Tata Steel India is the first integrated steel company in the world, outside Japan, to be awarded the Deming Application Prize 2008 for excellence in Total Quality Management.
    THE TATA GROUP
    257175607695Before we discuss at the length of the company, we would like to throw some light on the Tata Group of companies in present day India.
    28575636270Tata Steel is one of the ventures of the Tat Group but it has many successful companies under one umbrella. Some of the other notable Tata concerns and their lines of businesses are shown below.
    323850466725VISION OF THE COMPANY
    COMPETITION
    285750960120Tata Steel is undoubtedly the best steelmaker in the wrold. It produces the cheapest and best quality of steel in the world. In the last seven years the position of Tata Steel has reduced drastically because of Corus acquisition. The results of the acquistion will be profitable after 2010.
    MAJOR LOCAL STEEL PLAYERS
    -8572576835
    MANAGEMENT EFFICIENCY
    -2571751093470The structure of the Board was recently modified in 2007 post the acquisition of Corus acquisition to suitable incorporate changes which will lead to the adequate realization of synergies from the deal within the given stipulated time frame to reap the benefits from the much talked about and criticized deal.
    2009775126365BOARD OF DIRECTORS
    • 14 Board of Directors
    • 2. 8 independent, 6 non independent
    • 3. No of independent directors is more than one third of total number of directors.
    LEGAL ENVIRONMENT
    Global operations require compliance with multiple and complex laws and regulations. In countries where the political systems are still evolving, frequent changes in economic policy are common, investment guarantees and property rights are secured, any unforeseen changes can expose the Group’s businesses to uncertainties. The Group operations are primarily in countries where investment flows are freer and where there are established political, business and legal frameworks in place. There is an established due process to independently evaluate country risk exposures for investments in emerging economies
    TATA STEEL – PRODUCTS
    190502540
    Financing and Liquidity Strategy of the Tata Steel Group in response to the global economic crisis.
    They have responded by increasing production post commissioning of the 1.8 mtpa programme and focusing on performance improvement to neutralise the effect of reduced realisations, whereas in South East Asia, the focus is on working capital management and cost reduction. In Europe we have cut production by idling blast furnaces at three sites in order to align production with demand as a part of the “Weathering the Storm” initiative which resulted in cash savings of £712 million (US$1.02 billion) in the second half of the financial year 2008-09. Further, these efforts have been supplemented by a strategic restructuring initiative launched as “Fit for Future” programme which when completed, will result in improvement of the operating profit of around £200 million annually. In all sites across the Group, the journey of ‘Continuous Improvement’ stays on course
    Recognizing the uncertain financing environment and the fragile state of the global banking industry, they focussed on both internal and external levers. Internally as an organisation, the company placed primary importance on conserving liquidity through reduced spend management and sharp reduction in working capital levels. They also focussed on improvement in the productivity levels and reduction in overheads. On capital expenditure, they have re-prioritised on the most value creating and critical projects and reworked the capital planning strategy.
    On the external front, the company raised long term capital which acted as a liquidity buffer in the current circumstance and would be deployed in value creating long term assets. The above actions ensured that the Tata Steel Group had adequate liquidity and also financial flexibility for growth and exigencies. The liquidity position of the Group at the year end was approximately US$1.9 billion of cash and cash equivalents and undrawn lines.
    THE EIC APPROACH
    ECONOMY
    The steel industry has traditionally been very sensitive to the changing economic conditions. The recent economic meltdown has created several challenges – which when addressed appropriately, can be countered to positive eff ect. However, unlike the previous global recessions, this time around, all the countries have come together and taken action. Additionally, there has been a tremendous amount of governmental response to the global depression which is helping to bring about a possible easing of the situation.
    The global downturn also had a major effect on various industries dependant on steel. Major contraction in the construction projects, automobiles, white goods demand from the third quarter of 2008-09 resulted in the global demand for steel dropping by 21% compared to the level consumed in the same quarter of the previous year.
    The demand for steel declined by 26% in the UK and Europe in the third quarter compared to a year earlier and after a further contraction in the fourth quarter, demand had fallen by 57% in the UK and 44% in Europe compared with a year ago. This reflected in a sharp downturn in private construction projects, as well as large falls in automotive and mechanical engineering, amplified by severe destocking by both end users and service centers.
    INDUSTRY
    Some of the major sectors are:
    778510130175

    Indian steel production has increased by 5 million tones every year. The economic reforms initiated by the government since 1991 have added new dimensions to industrial growth in general and steel industry in particular. Steel industry has been removed from the list of industries reserved for the public sector.
    Automatic approval of foreign equity investment up to 100% is now available. Price and distribution controls have been removed from January 1992, with a view to make the steel industry efficient and competitive.
    Company
    The year 2008-09 was a historical one epitomised by the acute global financial imbalance which initially appeared to have spared India only to impact the markets adversely as the year rolled on. The global economic slowdown has impacted the steel sector as well. Amidst the turmoil in the global marketplace, Jamshedpur Works performed remarkably creating many records on the way.
    Indian operations witnessed a less pronounced drop in demand of 11% in the third quarter, reflecting the reduced activity in infrastructure and commercial vehicles. Steel is required by various industries as an important raw material constituent.
    Tata Steel has taken aggressive steps to meet the challenges of these difficult times through major initiatives in cost reduction, process improvement and production rationalisation. The highest priority is being given to expanding steel producing capacity in Jamshedpur, and ensuring raw material security for the European operations which do not have captive iron ore and coal resources. The Tata Steel Group has developed a pipeline of high quality projects, which will be executed, though we will re-phase the sequence. Projects like the 3 million tone expansion in Jamshedpur, the proposed steel plant in Orissa and raw material projects in Mozambique, South Africa and Canada are key drivers of our future value creation.
    FinancialAnalysis
    -2095500
    -152400133350
    Balance Sheet Analysis
    ASSET SIDE
    2913776256743Capital budgeting
    The ratio required to calculate capital budgeting is mainly Debt-Equity ratio. Tata steel has increasing debts. So the company has gone in for debt financing and thus, the company is having a comparatively higher borrowing from the market. Basically the Debt-Equity ratio has to be as high as possible so that the company has lower borrowings and has to pay less interest.
    Tata steel has increasing debts. So the company has gone in for debt financing and thus, the company is having a comparatively higher borrowing from the market. Basically the Debt-Equity ratio has to be as low as possible so that the company has lower borrowings and has to pay less interest.
    INVESTMENTS
    717042996696It can be seen that investments in the last year has increased drastically from negative cash flows to positive cash flows in investment. This was result of investing subsidiary companies especially Tata Steel Holdings PTE. It made an investment of about Rs 35,633 crores against Rs 72 lakhs. This has lead to increase in investments.
    3065628-3970Cash management
    This requires cash ratio, which includes cash and cash equivalent / current liabilities. Over years this company has managed to keep up their cash management at par with other companies. In recent times this company has raised their cash ratio as compared to previous years.
    Debtors Management
    -16349518998This requires Debtor’s turnover ratio which is calculated by, Debtors/Sales. This ratio has to be as low as possible so as to gain maximum liquidity for the company. This means that the debtors will return money in these many days.
    Tata steel took over Corus in recent past and had taken a loan for that purpose and due to this loan their Debtor’s turnover ratio just shot up from 29.81 to 33.45.
    2999166277389Inventory Management
    We get inventory turnover ratio by, Cost of Goods Sold/Average or Current Period Inventory. High turnover ratio is usually beneficial for any company as products tend to deteriorate as they are kept in a warehouse.
    Tata steel has managed to keep their inventory management very efficient during these years as we can see below that it keeps on increasing and that is what every company needs, a very efficient inventory management system.
    LIABILITIES
    SHARE CAPITAL
    EQUITY CAPITAL
    In the current year the company issues equity capital of Rs 4881 cr as against 1393 crores, this led to the sharp increase in equity capital. The company has a mix of debt and equity for fund raising. In last four years company raised money through right s and debentures but this year they preferred equity capital.
    PREFERNCE CAPITAL
    In 2007-08 the company issued preference shares of Rs 5472 crores and issued 60, 00,000 2% Cumulative Convertible Preference Shares. Also, 2,85,00,000 shares of face value of Rs. 10 per share allotted to Tata Sons Limited on a preferential basis during the year 2007-08.
    RESERVES AND SURPLUS
    • There was a steep increase in reserves in 2008-09 due to increase in foreign currency translation reserve, but in 2008-09, the company gained Rs 40 crores in foreign exchange fluctuation reserve. On the other side the company faced losses of Rs 5496 crores as actual loss.
    80276789916
    Over the years the company has been increasing its income in share premium account, through conversion of warrants and preference shares.
    SECURED LOANS
    Debentures
    Tata Steel placed Non-Convertible Debentures totaling upto Rs. 2,000 crore in May 2008 comprising of 3 series having phased maturities. The Company further raised a 2-year term loan of Rs. 2,000 crore in May 2008. In November 2008, the Company raised Rs. 1,250 crore through Non-Convertible Debentures privately placed with the Life Insurance Corporation of India, repayable in equal installments at the end of the 6th, 7th and 8th years.
    In April 2009, the Company further raised Rs. 2,000 crore from a term loan and in May 2009, it privately placed Rs. 2,150 crore of Non-Convertible Debentures repayable after 10 years. Thus the Company raised Rs. 9,400 crore in a year marked by tight liquidity.
    One important thing to note is that the interest on debentures is increasing every year even though the amount of debentures has reduced considerably.
    LOANS and ADVANCES
    1654021608338The debt in the Company’s consolidated balance sheet has increased considerably after the Corus acquisition. The gross debt in the Tata Steel Group was US$10.54 billion in March 2008 which increased to US$11.78 billion as at the end of March 2009. Tata Steel has about $9 billion of debt in its books and has to repay $795 million in 2009-10 and $1.3 billion in 2010-11; however, the company is free from repayment until December 2009. It has $1.9 billion cash and cash equivalents in its books, and requires $1.2 billion for its capital expenditure during this fiscal.
    The increase was primarily on account of raising of new loans to the tune of US$2.07 billion, during the year in Tata Steel India, to fund growth projects and to ensure an adequate liquidity buffer in the wake of global liquidity crisis.
    During the year, the company repaid debts to the extent of US$ 1.66 billion including a prepayment of debt in Tata Steel Europe of around £150 m (US$215 million). The entire foreign currency term debt in Tata Steel India is hedged into rupees at acceptable levels. Therefore the company was unaffected by the volatile movement of the rupee on account of the above loans.
    The gross debt as on March 2009, showed an increase of US$830 million, which was primarily on account of revaluation, due to currency movements. Taking into account the liquid equivalents of US$1.9 billion, the net consolidated debt as at March 31, 2009 was US$9.9 billion.
    497814-109054
    485775895985 If the performance of previous years is compared it can be seen that the loans and advances reduced substantially as the advance against equity was converted into investments during the financial year and accordingly there was an increase in the investments.
    The Company entered into a loan agreement with the State Bank of India and other banks for Rs. 9,500 crores. In January 2008 Rs. 9,000 crores was repaid with proceeds from the Company’s Rights Issue and Rs. 500 crores was repaid on 28th February, 2008.􀁺 In November 2007, the Company made a rights issue offering to shareholders in India, (i) 1 ordinary share for every five ordinary shares at a price of Rs. 300 per share and (ii) 9 cumulative compulsorily convertible preference shares (“CCPS”) for every 10 ordinary shares at a price of Rs. 100 each.
    Unsecured Loans
    In the year 2008, Tata Steel raised $500 million equivalent seven-year senior unsecured bank loan facility in yen to fund production capacity expansion and also acquisitions.
    15657insideThe Company issued USD 0.875 billion of 1% Foreign Currency Convertible Alternative Reference Securities (“CARS”). The CARS accrue interest on the outstanding principal amount at a rate equal to 1% per annum and are classified as unsecured debt on the balance sheet of the Company.
    During the current fiscal year, the secured and unsecured loans increased by Rs. 8,924 crore as compared to the balances as on 31st March, 2008 mainly due to issue of privately placed non-convertible debentures, term loans taken from Banks and other short term borrowings.
    In 2007 the loans increased from Rs 324 crores to Rs 5562 crores due to new syndicate foreign currency loans drawn for funding the acquisition of Corus Group plc. The Company has drawn foreign currency syndicate loans of Rs. 7,225 crores (USD 1.65 billion) during the year as per details given below:
    1. JPY Syndicated External Commercial Borrowings of USD 495 million equivalent: Rs. 2,162.66 crores (unsecured loan)
    2. External Commercial Borrowings of USD 5 million equivalent: Rs. 21.77 crores (unsecured loan)
    3. JPY Syndicated External Commercial Borrowings of USD 750 million equivalent: Rs. 3,298.88 crores (unsecured loan)
    4. International Finance Corporation, Washington - A Loan USD 100 million equivalent: Rs. 435.35 crores (secured loan)
    CURRENT LIABILITIES
    688467194691
    The current liabilities increased by Rs. 577 crores from a level of Rs. 3,523 crores as on 31st March, 2007 to Rs, 855 crores as on 31st March, 2008. The increase was mainly due to increase in the value of purchases/services on account of expansion projects.
    PROFIT AND LOSS A/C
    Increase in Profit % from 2003 to 2008.
    4572000
    Tata steel showed steady rate in profit.
    Its profit increased by 1012.31 to 4687.03 from 2003 to 2008 i.e. by Rs 3674.72 crores.
    From the above table TATA STEEL has given good profits in the year 2004 and 2005.
    Due to deal with CORUS and NATSTEEL company’s profits declined sharply but after 2006 the profit rate increased gradually.
    Decline in profits in year 2007 to 2008 is because of Recession hit the market.
    Gross Profit
    Year2008-092008-072007-06Amount (Rs in Crs)9778.518830.001497.81
    The Gross Profit has increased over the period of 3 years however the change in Gross Profit from 2008-09 and 2007-08 was less as compared to 2006-07 and 2007-08. The Graph shows the increase in Gross Profit 2006-07 to 2008-09.
    Profit before Depreciation & Tax
    Year2008-092008-072007-06Amount (Rs in Crs)8289.017900.977080.94
    The Profit before depreciation and Tax increased at a rate of 11.84% from 2006-07 to 2007-08 and 4.91% from 2007-08 to 2008-09. The fall in the PBDT was mainly due to the market crunch and global recession which left it’s a mark on the company’s Financial Statements’. However it was observed that the company’s Profits after depreciation and tax followed a stable increase i.e. an average increase of 11%.
    Gross Profit Margin
    The GP Margin for 2006-07 was 7.58% followed by 39.79% in 2007-08 and 36.43% in 2008-09.
    439295-78931
    Depreciation:
    • Capital Assets whose ownership does not west in the company is depreciated over the estimated useful; life or five years whichever is less.
    • 4. In respect of other assets depreciation is provided on a straight line basis applying the rate specified in Schedule 14 to the Companies Act 1956 or based on estimated useful life whichever is higher. However, asset value up to Rs 25000 is fully depreciated in the year of acquisition. The details of estimated life of each category of assets are as under:
    • 5. Building 30 – 60 years.
    • 6. Plant & Machinery 6 – 21 years.
    • 7. Railway Sidings 21 years.
    • 8. Vehicles and Aircrafts 5 – 18 years.
    • 9. Furniture, Fixture & Office Equipments 5 years.
    • 10. Intangibles (computer software) 5 – 10 years.
    • 11. Development of property for development of mines and collieries are depreciated over the useful life of the mine or lease period whichever is less, subject to a maximum of 10 years.
    • 12. Blast furnace relining is depreciated over a period of 10 years (average expected Life).
    Total depreciation for the Financial Year 2006-07 accounted to Rs. 819.29 crs followed by Rs. 834.61 crs in 2007-08 and Rs. 973.40 crs in 2008-09.
    FINANCIAL RISK
    TAX AND INTEREST RATE ANYALSIS
    From the above balance sheet Interest charged in 2008 is 41,493 (Rs mn) and in 2009 it decrease to 38,283 (Rs mn) i.e. Change of -8.4%.
    Tax charged in 2008 was 40,493 (Rs mn) and in 2009 it decrease to 39,751 (Rs mn) due to decrease in gross profit.
    Finance for the Corus acquisition was raised through bridge loans and later refinanced by Tata Steel which has led to a dramatic increase in the interest outflow; in the April-June quarter the interest outflow was Rs241.7 crore compared to Rs41.6 crore for the same quarter last year.
    Dividend Policy
    Tata Steel has been continuously providing dividend to its shareholders to maximize its wealth. In the year 2008-09 the company paid a dividend of Rs 1168.95 crores. The payment of dividend is always fixed by the company irrespective of profits or losses.
    Tata Steel is giving a significant higher rate of dividend year after year in comparison to its nearest competitor’s.
    In 2006-07 the year the company completed 100 years a dividend of 25% was issued to the shareholders.
    697992267081
    Tata Steel was initially giving higher amount of dividend initially on its PAT. But over a period of time, it decided to change its strategy and putting back all its earnings on development of the company.
    85725506730Fund Flow & Cash Flow Statements
    Analysis of Funds Flow and Cash Flow Statements
    SOURCES OF FUNDS
    The profit after taxes has been consistently increasing in the past five years despite the global crisis and acquisition of Corus in 2007.So the total PAT available in 2009 is Rs 21091 crores. Since Tata Steel has a lot of fixed assets in terms of plants and machinery the depreciation is also increasing at a slower rate, one more reason is that they introduced two blast furnaces in Jamshedpur this year, which led ot increase In depreciation this year.
    In the last 5 years the share capital of the company was very good, but due to issuing of new shares the share capital is now negative.
    Borrowings have been consistent. The way the company managed its borrowings was amazing. From negative balances, they turned into Rs 5000 crores positive balances; this was as a result of loans taken to finance Corus deal. Some installments are to be paid after 2011, so there is not too much burden on Balance Sheet.
    APPLICATION OF FUNDS
    The capital expenditure was normal in all the years, not much movement is seen in terms of investment in plant and machinery.
    Investments increased significantly. It can be seen that investments in the last year has increased drastically from negative cash flows to positive cash flows in investment. This was result of investing subsidiary companies especially Tata Steel Holdings PTE. It made an investment of about Rs 35,633 crores against Rs 72 lakhs.
    The company also announces dividends to the shareholders. Every year it gives dividends in the range of 100 to 160 %. This year they gave a dividend of 13 Rs per share, due to which the total outlay was Rs 5632 cr.
    The biggest contributor in Utilization of Funds was because of increase in working capital expenses. In early 2008, the unprecedented increase in the prices of input costs, particularly raw materials, substantially increased the working capital requirements. The change in working capital, during the financial year, was mainly due to increase in inventories on account of volumes and prices partly offset by an increase in creditors. The working capital during FY 09 reduced by Rs. 225 crore, mainly due to a reduction in Inventory (with reduction in finished and semi-finished inventory and increase in raw materials inventory) and Debtors.
    0419100FINANCIAL RATIOS
    Ratio Analysis
    Operating expenses are expected to increase marginally resulting in increase of EBITDA margin of 38.7%.But compared to previous year the EBITDA/Turnover has reduced because the profits were higher than last years.
    ROCE over the years has reduced because of slowdown as well as huge inventories of stock and new plants introduced in Jamshedpur.
    Asset Turnover is very good In last four years the assets were utilized to the fullest but in the last year due to less demand, it reduced by 1%, but in overall terms it is optimally used all resources.
    • Debt Equity Ratio
    • 13. 111442588900
    Tata Steel over the years has been increasing its debt in order to finance the Corus deal. They took a loan of $ 8 Billion from the bank to acquire Corus.
    • Current Ratio
    • 14. The current ratio is a financial ratio that measures whether or not the firm has enough resources to pay its debts over the next 12 months. It compares a firm’s current assets to its current liabilities. Tata Steel has a high amount of unutilized current assets. The company has high level of inventory or WIP. Since the demand for steel has reduced drastically the company is having huge inventory and because of this the liquid ratio is low.
    • 15. Debtors Turnover Ratio
    • 16. The stakeholders of the company like distributors and suppliers have a lot of confidence in the company. This shows the creditworthiness and brand value of the company. Since debtors are paying back in comparatively less number of days shows faster movement of goods in the market.
    • 17. EBITDA/TURNOVER RATIO
    The EBITDA for the Group at Rs. 18,495 crores (US$ 3,636 mn) for the financial year 2008-09 was1% higher than the EBITDA of Rs.18, 287 Crores (US$ 3,595 mn) recorded during the financial year 2007-08.
    • EPS RATIO
    EPS is the reported profit over the number of shareholders in the company. In the last 5 years EPS has doubled from 31 to 66 and it is expected to reach 104 in FY10.
    • P/E RATIO
    • 18. P/E RATIO IS expected to double in 2010 because of higher profitability and dividend payouts in the previous years.
    • 19. Future Prospects
    • 20. 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 10 MTPA unit by 2010.*MTPA = million tonnes per annum
    • Solution for Sales (SFS) offers based on the Theory of Constraints (TOC) concept saw stabilisation in the steel division. The replenishment module was extended to cover 100% of the retail channel of TATA TISCON, achieved 90% coverage in TATA SHAKTEE and 60% in TATA Steelium. This resulted in a reduction of stock outs in retail shops and more significantly, a reduction in channel stocks. Reliability solutions were extended to direct customers in the Steelium distribution. For the Construction Projects segment, an S-DBR (Simplified Drum Buff er Rope) mechanism was implemented under the Theory of strains supply chain improvement initiative which improved the availability of rebars at the warehouses, thereby reducing instances of delays and loss of orders.
    • 21. The term focus is on the implementation of the “Fit for Future” restructuring in Europe, to continue with the 3 mtpa expansion project in Jamshedpur and overseas raw material projects, to increase production volume in India and optimise working capital management across the Group to preserve liquidity
    Looking towards the future, the steel industry’s main contribution to the reduction of CO2 emissions should be to further develop the use of by-products and to work with its customers to help design well, long lasting, more energy and material efficient products. Additionally, improvements in areas other than primary steel production may offer further opportunities for CO2 reduction