Tata steel

Tata Steel
SWOT Analysis of Tata Steel (Earlier known as Tata Iron & Steel
Created by: Shantanu kumar
Company up to 2005)
Contents:
1. Tata Steel - Company Overview
2. Tata Steel - Business Description
3. Tata Steel – History
4. Tata Steel - Major Products and
Services
5. SWOT Analysis – Overview
6. Tata Steel – Strengths
7. Tata Steel – Weaknesses
8. Tata Steel – Opportunities
9. Tata Steel – Threats
10.Conclusion

Tata Steel
1. Tata Steel - Company Overview
Tata Steel has always believed that the principle of mutual benefit -
between countries, corporations, customers, employees and
communities - is the most effective route to profitable and
sustainable growth.
Established in 1907, Tata Steel is among the top ten global steel
companies with an annual crude steel capacity of over 28 million
tonnes per annum.
The Tata Steel Group, with a turnover of US$ 26.13 billion in FY
2011- 2012, has over 81,000 employees across five continents and
is a Fortune 500 company.

Tata Steel
2. Tata Steel - Business Description
Tata Steel formerly known as TISCO and Tata Iron and
Steel Company Limited, is the world's seventh largest
steel company, with an annual crude steel capacity of
31 million tonnes. It is the largest private sector steel
company in India in terms of domestic production.
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 Indian
Rupee .Its main plant is located in Jamshedpur,
Jharkhand, with its recent acquisitions; the company has
become a multinational with operations in various
countries. 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 82,700 people (as of 2007)
Tata steel:-
Our Vision and our values
Our vision is to be the global steel industry benchmark
for value creation and corporate citizenship.

Tata Steel
Our brand
The Tata brand is highly respected throughout the world.
Organisation & management
Tata Steel Europe is part of the Tata Steel Group. The
day-to-day management of the company is conducted
through the Executive Committee.
Procurement
Procurement objectives are dominated by ensuring the
best value for the company, whilst ensuring security of
supply.

Tata Steel
3. Tata Steel – History
TISCO was established by Dorabji Tata August 26, 1907, as part of
his father Jamsetji 's Tata Group In year 1939, it had largest steel
plant in the British empire. A modernization and expansion program
was launched in year 1951.
The origins of Tata Steel, which has culminated
into the century long history of an industrial
empire, The story of Tata Steel is a century old.
And so is the story of steel in India. Etched with
the visions and hardships of a single man, the
story has flowed through ages to redefine steel in
every way. The saga, which started in 1907,
completes a century of trust in 2007. Over the
years this one company has exposed the various
shapes and forms in which steel can be applied for
effective utilization.
The story of Tata Steel: The leading Indian
intellectuals of the 19th century believed that if
India were to keep pace with the world it would
have to master the modern scientific methods of
the West. In these times was born Jamsetji
Nusserwanji Tata. Within his lifetime, Jamsetji was
to witness the birth of a revolutionary Indian
nationalism that would assist in the emergence of
independent India, which he helped to create and
whose presence could already be felt when he
died in 1904.

Tata Steel
4. Tata Steel - Major Products and
Services
Products
Tata steel offer a wide range of standard and
differentiated products for different and demanding
markets worldwide such as ultra-high strength steel
for Automotive, speciality steels for Aerospace and
ultra-high hardness steels for Defence & Security.
All Products:-
1. Cold rolled
2. Metallic coated
3. Direct rolled
4. Narrow Strip

Tata Steel
5. Pre-finished steels
6. Packaging steels
7. Plated steels
8. Electrical steel
9. Hot rolled
10. Tube
11. Sections

Tata Steel
12. Special profiles
13. Rail
14. Wire rod
15. Speciality steel &
products
16. Plates
17. Floors

Tata Steel
18. Walls
19. Roofs
20. Modular
21. Building component
22. Structural steelwork

Tata Steel
5. SWOT Analysis – Overview
A SWOT analysis focuses on the four elements of the
acronym, but the graphic format you use varies depending
on the depth and complexity of your effort.
The purpose of performing a SWOT is to reveal positive
forces that work together and potential problems that
need to be addressed or at least recognized. Before you
conduct a SWOT session, decide what format or layout you
will use to communicate these issues most clearly for you.
We will discuss the process of creating the analysis below,
but first here are a few sample layouts-ideas of what
SWOT analysis can look like.
INTERNAL EXTERNAL
Strengths Weaknesses Opportunities Threats
Positives Negatives
 strengths
 assets
 resources
 opportunities
 prospects
 weaknesses
 limitations
 restrictions
 threats
 challenges

Tata Steel
6. Tata Steel – Strengths
1. Mineral Reserves -
 Tata Steel has two collieries in West Bokaro and
Jharia, in the state of Jharkhand.
 The iron ore units are located in Noamundi, Joda
and Katamandi in the states of Jharkhand and
Orissa.
 These mines are located at an approximate
distance of 150 kms from Jamshedpur; home to
the steel company’s manufacturing facility.
 The Steel Company's iron ore units produce 9
million tons per annum of various grades of high
quality iron ore including rich blue dust ore. The
company in India is having mines of 281 million
tonnes reserves in its mines in Jharkhand.
2. Information Technology -

Tata Steel
 The entire mining operation of the Company is
safeguarded against accident occurrence.
Proactive measures are undertaken to ensure the
employee's health and productivity through
ergonomically designed work stations and by
protecting them from occupational hazards.
 . All its mines are ISO-14001 -Environmental
Management System Certified. Tata Steel's
collieries use 'Surpass', a state-of-the-art mine
planning software that estimates the volume of
coal in every seam.
 This software is coupled with qualitative detailing
that focuses on output consistency. To maximize
productivity and utilization, a voice and data
equipped Global Positioning System is used.
3. Management Team -

Tata Steel
 Tata Steel has a highly credible management
team who has displayed their skills in expanding
the company through inorganic route.
 The company has successfully acquired Nat Steel
of Indonesia, Millennium Steel of Thailand and
more importantly Corus.
 The company’s virtuosos of finance have been
able to find innovative ways to tackle the
company’s bludgeoning debt and keep the
bottom line in the green zone despite lowering
demand and huge debts accumulated.
4. Innovativeness of TATA Steel with
respect to its competitors -
 Tata Steel has the lowest operating cost for steel
manufacture in the world.
 Further it has displayed effective means in
adopting an eco-friendly and sustainable
approach towards the manufacture of steel.

Tata Steel
5. Adaptability of the company in the
fast change of the environment –
 Tata Steel has displayed immense agility in the
recent past during the global financial tsunami.
 Its virtuosos of various fields have adopted
various methods like lowering of production and
even shutting down of steel plant sowing to the
lack of demand, managing the balance sheet
efficiently etc.
 The company has 70% of its procurement of raw
materials for its operations in Asia through long
term contracts.
6. Brand value -
 The TATA brand owing to its highly ethical and a
socialistic approach to business have made its
name synonymous to trust. After the acquisition

Tata Steel
of Corus another powerful brand, the brand value
of the company has enhanced further.
7. Corporate governance-
 Tata Steel has had impeccable record for
corporate governance. It has set the benchmark
in global corporate governance principles of
transparency, accountability and equity for others
to follow.
 Tata Steel has been consistently receiving
prestigious awards at both the national and the
international arena.
 The Best Governed Company Award for corporate
practices presented by Asian Centre for Corporate
Governance.
8. Excellent integration with Corus–

Tata Steel
 Corus has a great reserve of around2000
metallurgists and technology which could be
exploited by Tata Steel on several fronts.
9. Excellent procurement
philosophy-
 Tata Steel has around 70% of its supplies through
long term contracts. Thus it can be shielded from
the volatility of the financial markets.
10. Spawning upon opportunities-
 Tata Steel has been amongst the earliest to spot
the escalation in the demand for steel in the forth
coming years. It has hence invested heavily in the
expansion of its existing facility at Jamshedpur
and is setting up other green field projects at
Orissa, Jharkhand etc.

Tata Steel
7. Tata Steel –Weaknesses
1. Huge debt burden
- Tata Steel is having a total debt of 10.2 billion USD in
its books. It has a debt equity ratio 0f 1.6 which means
that the assets of the company is largely financed
through debt.
2. High attrition rate
- Tata Steel has traditionally faced the brunt of high
attrition rate. In its Jamshedpur plant many engineers
constantly change their jobs to SAIL in Bokaro and
vice-versa. Thus the formation of a core team
of capable individuals across all departments is
very difficult as the size of the team is ever changing.
3. Products in the portfolio lacking
demand
- The company has certain products in its portfolio like
aerospace steel which lacked demand in the recent
past. Primarily due to the slow down of the aviation
sector which led to delay in the delivery of aircrafts as
a result of cutting of capacity by airlines. The company
also had certain Cast products largely marketing in
the UK which has been witnessing slowdown in demand
since 2001
4. Degradation in brand value
owing to job losses
-TATA group has made its name synonymous to job
security of it employees. But the shutdown of its plants

Tata Steel
in the UK and The Netherlands will dent its image to a
certain extent. As a result of which around 1600
employees would lose their daily livelihood.
5. Low cost recovery
– There are specific products like the aerospace
steel and cast products which has received feeble
response in the past. The company has failed to
recover costs in this business front.
6. Laggard in technological front
- Companies like SAIL has efficiently introduced the
XRF (X-Ray Fluorescence) in its plants at Durgapur and
Bokaro over 12 months back which the Tata Steel has
failed to do.
7. Bad raw material procurement
philosophy of its subsidiaries
- The largest subsidiary of Tata Steel,
Corus has high exposure to spot prices and
a higher operational gearing among the larger European
steel companies. Hence it has the risk of volatility
associated with pricing, one of the key elements
in determining profitability of a commodity company.
8. Tata Steel –Opportunities
1. Competitive position of the company-

Tata Steel
Tata Steel is the second largest producer of steel in India and the sixth largest
producer in the world.
2. Newer technologies –
i. The Codex process
Combines an iron meter/coal gas if vessel with a pre-reduction shaft to
produce a liquid product that is very similar to blast furnace hot metal. Coal,
oxygen, and pre-reduced iron are fed into the meter/gas to melt the iron and
produce a highly reducing off-gas.
ii. The His melt process
Iron reduction and coal gasification take place in a liquid metal bath. The
fundamental processes of HI smelt began with early experiments in Germany
with bottom-blown oxygen steel making converters (LD, LD-AC, KMS, among
others) to allow for coal, lime, and/or iron ore injection through the bottom
nozzles.
iii. Direct Iron Ore Smelting
(DIOS) process in Japan and the AISI direct steelmaking process in North
America produced two similar routes to hot metal production. Both processes
utilize a smelting reactor where the primary reactions occur in a deep slag bath
as opposed to in the metal phase.
3. Opportunities in the field-
The Government of India has earmarked Rs.1, 70,000 crore
for infrastructural spending for the fiscal year 2010- 2011 and
the trend is set to escalate up to the fiscal year 2025 when
India is slated to become the third largest economy in the
world. Further many private players either independently or

Tata Steel
by undergoing public private partnerships (PPP) has also
come into the fray. The consumption of steel has been
steadily increasing with the rapid investment in
the infrastructure and real estate projects. The annual steel
production of India has touched 200MT and according to
governments steel policy is expected to touch around 250
MT by 2013-2014. The demand for Indian made steel
is escalating overseas out of the 200 MT of steel currently
produced in India around 50% of it is exported. In the first six
months of the fiscal year 2009-2010 the Indian steel export
almost doubled to 9.3MT from 4.4MT in the same period the
previous fiscal year. The country’s iron ore exports during
April-October 2009 period grew 20 per cent over the year
ago period to 53 million tons.
4. Acquisition opportunities -
In the aftermath of the financial tsunami various mineral
assets are available globally at a price which is just a shade of
their prime valuations. The government of various countries
has been putting up coal blocks under the hammer. Tata
Steel has been very active in the asset acquisition space and

Tata Steel
has bagged various coal blocks in Asia, Africa etc. which is
essential for its security of raw materials.
5. Opportunities for demand of higher prices-
The demand for steel is on arise both domestically and
internationally as a result of the enhanced focus upon infrastructural
development. Secondly with other steel projects of international
giants POSCO, ARCELOR MITTAL stalled due to land acquisition
problems the prices of steel are slated to soar. In the month of April
2010 the steel prices were increased by Rs.2500/ton and this is just
the brink of the U-Shaped economic recovery and the prices are
slated to rise further in the near future.
6. The movement of Tata Steel in the value chain front-
India is the only country in the world where steel can be made
cheaper and there is consumption. Then there are other countries
like Ukraine, Iran, Brazil, Australia and Bangladesh where steel can
be made cheap because of the availability of iron ore and coal. Tata
Steel has been to Iran, Ukraine, and Bangladesh - all in the last year
and is looking at China for finishing capabilities Ukraine is like India,
where the factors of production are competitive. The sustainable
level of demand in Ukraine is 12 million tons (MT), but one can make
much more steel because of the availability of ore. Secondly, the
labour is cheap in India.

Tata Steel
9. Tata Steel –Threats
1. Resources to cushion the from business
environmental change-
Tata Steel is a company floated by Tata Sons whose
assets are valued at around 108 billion USD and thus
the company has enough reserves to cushion itself
from market fluctuations.
2. International competition-
Companies like the Indian Steel magnate Lakshmi
Mittal’s Arcelor Mittal’s, Posco has landed in the
shores of India and have proposed to set up 8 MT
and 12 MT respectively. These are amongst the largest
steel producers in the world and have a high chance
of eating into the market share of Tata Steel. Indian
market is also plagued with cheaper Chinese made
steel which is ubiquitously available and is significantly
munching through the pie of all Indian steel makers
including Tata Steel.

Tata Steel
3. Financial Crises -
Tata Steel is having a huge debt of 10.2 billion USD
in its books and hence a huge interest burden. With
the volatility of the financial markets and the
tightening of the liquidity by the central banks this
rate is slated to go up and hence would further
increase the interest burden of the company.
4. Adoptability of the company to technological
changes –
Tata Steel has shown immense integration abilities in
the past. With the acquisition of it has been able to
imbibe the high end technological knowledge to its
production facilities and hence has been able to
produce high quality steel at least prices and
significantly bettered its operating margins.
5. Regulatory norms-
The government of India has chalked a strict norm
for the clearance of a plant through environmental

Tata Steel
impact assessment (EIA). To get clearance from the
concerned authority demands more than eight
months thus leads to delay and project cost
escalation. Albeit the governments’ steel policy has
been pro industry in order to increase the steel
capacity at a brisk pace.
6. Adverse effects of land acquisition picketing-
India is plagued with violent agitation against land
acquisition. The land acquisition process of the
company’s plant in Orissa has been stalled primarily
due to the uprising of the land losers in the
concerned area. Albeit the company is providing with
attractive compensation packages, the uprising is
primarily due to the cheap politics of the local leaders
to come into the limelight. This will severely dent the
company’s expansion plans of the future.
7. Decrement in the sales volumes-

Tata Steel
Some of the Tata Steel products (like aerospace steel)
have witnessed a severe reduction in sales and as a
result of which the production facilities of the
company in the UK and The Netherlands is facing the
brunt of shut down.
8. Brand equity of the products-
Tata Steel brand is a very powerful one, can only take
a product very far. Beyond that it will be necessary for
the Product to strike ahead with its own brand. He
says, "A villager who goes to buy steel in the
marketplace does not know what Tata Steel is
bringing to this steel. All he knows is that it is a Tata
product." That villager needs to be told about the
superiority of Tata Steel’s product over others. This is
the work of the brand. Branding has begun to yield
rich dividends. Last year Tata Steel sold about 345,000
tons of branded steel,
10. Tata Steel-Conclusion

Tata Steel
Tata Steel has shown that it is committed to
sustainable and environmental practices as
part of its overall aim to act responsibly. It
shows commitment and progress towards
key targets of sustainability as well as
encouraging sustainable decision-making in
its customers and within their markets.
The key to the success of this approach is to
recognise the unique properties of steel as a
recyclable material and to ensure that
measurements of sustainability are taken
over the entire life cycle of a product, not
just the use-phase.

Tata steel

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