TRIBHUVAN UNIVERSITY INSTITUTE OF ENGINEERING PULCHOWK CAMPUS
A CASE STUDY ON TATA STEELS
SUBMITTED BY: JAGDISH SHRESTHA 072MSTIM155
SUBMITTED TO NAWARAJ BHATTARAI (PHD.) TECHNOLOGY INNOVATION AND MANAGEMENT DEPARTMENT OF MECHANICAL ENGINEERING
1. INTRODUCTION Tata Steel was established in 1907. Tata Steel is India’s largest steel company with the capacity of 25.6 million tones annually. It was also Asia’s first such enterprise. It is among the lowest cost steel producer world wide. The capive raw material resources and state-of-the-art 5 million ton plant at Jamshedpur, Jharkand, gives it a competitive edge over other steel players. In order to be a global major, Tata Steel has acquired Corus (18 million ton), Natsteel Asia (2 million ton) and Millennium Steel( renamed Tata Steel Thailand-17 million ton) and is planning more mergers and acquisitions in future. It plans to create manufacturing networks in eight markets in South East Asia and Pacific countries. The plant at Jamshedpur will also be expanded to 7 million tons by June 2008 and 10 million ton by December 2010. The company will have a capacity of 50 million ton by 2015 through organic growth. The Company has a wire manufacturing unit in Sri Lanka known as Lanka Special Steel, and a joint venture in Thailand for limestone mining – Sila Eastern. The products are targeted at automobile sector and construction industry. They will emerge as a major global player in wire business with manufacturing facilities in India, Sri Lanka and Thailand. Tata Steel products include hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, construction rebars, rings and bearings. To ‘decommoditise’ steel, the company has introduced brands like Tata Steelium, Tata Shaktee, Tata Tiscon, Tata Bearings, Tata Agrico, Tata Wiron, Tata Pipes and Tata Stuctura. The company’s Customer Value Management initiative addresses the customer problems and provides solutions. The Retail Value Management addresses the needs of distributors, retailers and end consumers. The company has opened steel retail store- steel junction for steel shopping.
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1.1.
Board of Directors
Tata steel has a well efficient board of directors, who have managed the company to achieve higher productivity. The names of the directors and the designation they hold in the company are given below briefly. Mr. Ratan Tata
Chairman
Mr. James Leng
Non - Executive Deputy Chairman
Mr. Nusli N Wadia
Company Director
Mr. S.M Palia
Company Director
Mr. Suresh Krishna
Financial Institutions' Nominee
Mr. Ishaat Hussain
Board Member
Dr. Jamshed J Irani
Board Member
Mr. Subodh Bhargava
Board Member
Mr. Jacques Schraven
Non - Executive Independent Director
Dr. Anthony Haward
Non - Executive Independent Director
Mr. Philippe Varin
Non - Executive Non independent Director
Dr.T Mukherjee
Non Executive Director
Mr. B Muthuraman
Managing Director
Mr. Andrew Robb
Non Executive Independent Director
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1.2.
Mergers and Acquisition Tata steel over the past few years have been into Mergers & Acquisition with
major steel companies across the world. In 2005, Tata steel made its first major overseas investment in Natsteel and later owing the whole 100% of the company. This led Tata steel to enter into the South East Asia. In 2006, Tata steel acquired Millennium which further enhanced its market position in South East Asia. In the same year Tata BlueScope Steel Limited was formed as a 50:50 joint venture between Tata steel and BlueScope Australia. Tata Steel acquired 100% of the millennium company’s share. Tata acquired Corus Group in financial year 2007 was the biggest investment by an Indian company in an overseas venture. This acquisition has pushed Tata steel into the sixth in terms of total production capacity. Proportion Company
Country
of
investment
Year $ invested
activity
100%
USD 468m
Feb 2005
Thailand
67.1%
USD 167m
Apr 2006
UK
100 %
USD 12.2b
Jan 2007
of
Singapor Nat Steel Asia
e
Millennium Steel
Corus
1.3.
Corporate Social Responsibility
Tata Steel is a company that believes in values and social well being. It therefore has a strong and active involvement in Corporate Social Responsibility, and is dedicated to the discharge of social responsibilities to the community and the society at large, where industry is located.
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Tata Steel was pioneers in setting up of labor welfare practice, even before it got mandated world over. In 1912, it prepared a Memorandum of Health for the Steel City. The company conducted a eight hour workday in 1912. Medical aid in has been provided since 1915. A Welfare Department was initiated in 1917. Leave with pay, provident fund, workmen’s compensation (1920) and maternity benefits (1928) were also introduced. Besides providing work for the unemployed the company took the decision to address the needs of those who migrated to the locality in search of jobs. They supported entrepreneurship and economic growth, in surrounding areas and later to other regions. The company extended a helping hand to the rural poor empowering them with means for their livelihood. At the same time, Tata Steel also addressed the basic need for health care, food, education and income generation by developing rural infrastructure, empowering and other community welfare programmes. 1.4.
Vision of TATA Steel
We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship We make the difference through: Our People: By fostering teamwork, 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 workplace, respecting the environment, caring for our communities and demonstrating high ethical standards. 4
1.5.
Mission of TATA Steel
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. Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.
1.6.
Quality Vision 2016
We aspire to be the most trusted and preferred domestic supplier of value added steel with world class quality of products and services. 1.7.
Values of Tata Steels
The Tata Group has always been driven by five core values:
Integrity. We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
Understanding. We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
Excellence. We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.
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Unity. We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
Responsibility. We must be responsible and responsive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
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2. ANALYSIS Parent Company: Tata Group Category: Iron and Steel Sector: Industrial Products Tagline/ Slogan: Values stronger than steel USP: The top ten global steel companies with annual crude steel capacity of over 28 million tonnes per annum 2.1.
STP Analysis
Segment: Strip and Long steel products, Iron ore mining, Agricultural implements Target group: Construction, automotive, infrastructure, capital goods Positioning: The global steel industry benchmark for value creation and corporate citizenship Key Players: Arcelor Mittal ( Global) BaoSteel ( China) POSCO ( South Korea) JFE Holdings ( Japan) Local Players in India SAIL JSW Steel
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2.2.
SWOT Analysis
Strength
Tata steel is the largest steel manufacturer in India and is the 6 th largest steel player globally. o The company is the largest producer of steel in India. It is the major supplier of steel to the nation. Tata was previously ranked 56 th in the world. After the acquisition of Corus, it moved ahead to 6th place in terms of production.
It is one of the lowest cost producers of steel and also the most efficient steel plant in the world. o They have direct access to raw material their cost of production is low compared to other companies.
The acquirement of Corus enabled the company to upgrade its technology. o With the acquisition of Corus, the company not only moved ahead in terms of its production capacity but also in terms of its latest state of the art technology.
The company has backward integration in terms of raw materials such as iron ore and coal. The company owns mines and coal fields which ensure that there is no fluctuation in the price of raw material. o Tata steel has its own coal mines which has led to easy access of raw material and also to bring down the cost of production.
The company has a strong management team which focuses on expanding its presence domestically as well as globally. o The management team is one of the best among other companies. They have efficient team which works to expand the company internationally.
The company’s practices the best corporate governance in India which has helped the firm in going for foreign acquisitions. o The company has strictly followed the corporate norms. This has enabled them to move ahead to acquire foreign companies.
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Weakness
The acquisition of Corus group is difficult that expected. o Corus group is one of the largest steel producers in UK. Tata steel management had to make crucial decision. These decisions looked good in paper, but were difficult to implement.
Equity dilution from acquisition of Corus would reduce its earning per share. o The company has issued additional equity share in year 2007, which will have an impact on the EPS. The value of the shares may come down.
Opportunities
India economy is fast growing in terms of steel consumption, giving a wider market sector. India is second fastest growing economy after China. o India is the second largest next to China, in terms of production of steel. China leads the market by a huge margin, giving an opportunity for Tata steel to increase its productivity and bridge the gap.
The nation is going through a transformation in infrastructure in terms of roads, ports, airports. o Many airports and other infrastructures are coming up in India, which will give a good market for them domestically.
The consumer base is increasing
Threats
The price of steel in its peak and there can be a deflation in the price. o Steel price has been inflating every year. There may come a period when the price may start going downwards, which will affect the company’s revenue.
There is no slowdown in the rate of production in China. o Tata steel may have a chance to grab some part of market which China is enjoying. But with China’s production capacity going up every year, it is difficult to get a bigger market share.
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2.3. 2.3.1. 1. 2. 3. 2.3.2. 1. 2. 3. 4. 2.3.3. 1. 2. 3. 4.
Resource and Capabilities of Tata Steels Tangible Resources Financial resource Physical Resource Technological Resource Intangible Resources Reputational Resources Research and Development Organizational Culture Human Resource Capabilities: Low cost manufacturing Experienced Managing Team Innovation Capability Response to feedback from Customers
2.4.
PESTEL ANALYSIS OF TATA STEEL:
The PESTEL terms include the political, economic, socio-culture, environmental and legal aspects from by which the company influenced. The growth or the progress of the particular sector or the industry is depends upon these factors. These factors are important because these factors are bound with each and every aspect of the society internally as well as externally. 2.4.1. POLITICAL ASPECT: 2.4.1.1. MEANING OF THE POLITICAL ASPECT: Political aspect means the aspect which includes the government intervention in the particular sector or the for the company it is basically a political environment under which the company have to perform in well manner to achieve the stability and target goals in sector under which the business is running. This political aspect includes, taxation policy by which government decides the various tax implication on the company it includes the import and export regulation and other point which can be helpful for the growth of the company. Privatization and deregulation. The next important aspect in the political factor is of international trade regulations in which the government and various special ministry decides the various rules and regulations regarding the international trade done by the company. Government may also introduce a general initiative 10
which can helpful in the encouragement of the business which is ultimately leads to the growth of the company. Government stability is also one of the important factor in the business as the many of the important rules and regulations are decided by the government regarding the business it is important that the government should be stable in nature otherwise with change of the government the policies introduced by the government may also change which can be lead into instability in the business.it is also noted that the international stability is also important in the growth of the business. International stability includes the no war situation and other things which can be dangerous from the point of view of the company. 2.4.1.2. POLITICAL FACTOR OF THE TATA STEEL: 2.4.1.2.1. INVESTMENT IN THE UNSTABLE POLITICAL COUNTRIES: Though the Tata steel made the various acquisitions for the growth of the company and for the reason of the expansion of the business they took a very high amount of risk by investing in the countries like Bangladesh, Iran, and And Thailand. For example: the plan set up in the Bangladesh is getting delayed by the question of gas supply, whereas the issue of lease of the mining of the iron ore in the Iran country is responsible for the increase in the cost of the production. 2.4.1.2.2. INFRASTRUCTURAL DEVELOPMENT IN THE INDIA: Now a day's government is launching the various schemes for the development of the infrastructure of roads and transport. Every year Tata steel and other steel industries in India spends a huge amount on the freight and transportation with the launch of various schemes in infrastructure company could be able to save some amount which company spends on the freight and transportation. 2.4.1.2.3. EFFECTS OF THE LIBERLIZATION: The various liberalization schemes launched by the government after the year 1991.when the Indian economy opened globally, is responsible for the tremendous growth in the various sectors but the particularly in this sector. Various features can be discussed as follows: The licensing is required for the capacity creation which is removed Foreign equity investment got the permission up to 74%. Reduction in import and tariff reduced from the 105%im year 19921993to 30% in the year 1996-1997. Apart from this restrictions on the import and export have 11
been reduced. These are the some important features of the liberalization policy which leads to Tata steel to be on the growth path. Apart from this the mining policies of the government and other policies helped the Tata steel in reduction of import a duty and export duty and other things which are responsible for the high growth of the Tata steel industry globally. 2.4.2. ECONOMICAL FACTOR: Another important aspect in the PESTEL ANALYSIS is of the economic point of view .the growth and the stability of a particular company is depends on the economic conditions of the country. It may be nation economy or international economy. Various factors are responsible for the change in the economic conditions and with the change in these factors many times the company also got affected if the economic condition is very unstable in the nature the business may get affected from it as many times the business strategy got affected by this. The economic aspect of pestel analysis includes market trends, inflation rate, demand and supply of the particular commodity and globalization. If these factors are in unstable in nature the company may face the tremendous loss. With the change in the economic conditions a company should change its policy accordingly and to sustain in the depression period a detail research and survey should be done by the particular country. 2.4.2.1.
ECONOMIC FACTOR OF TATA STEEL:
Two years back the United States economy faces the SUBPRIME CRISIS which affected the each and every strong economy in a very negative way. During this period there was a very high risk in the international capital markets regarding the liquidity. In the year 2007, many foreign investments and equities got dampened because of the reduction in the confidence in the liquidity and the returns on the investment. Due to the subprime crisis in us European markets faced the problems of the recession this creates the bad impact on the Tata steel as the Netherlands, United Kingdom and Germany are the main markets for the CORUS COMPANY. Steel industry may got affected because of the cyclical economic condition because many industries like automobiles, appliances and construction are depends on the steel industry and if industries faces any kind of downturn in the economy Tata steel also may also face the losses. Steel production process are completely dependent on the energy market which can affect the
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Tata steel in the economic manner. With the acquisition of CORUS company gained the growth prospective in nature but, the cost of acquisition goes beyond the financial expectations.
2.4.3. SOCIO-CULTURE FACTOR: Socio-culture aspect means the achievements or the willingness of the company to do the welfare of the people in society without the profit earning motive .it is deal with social responsibility .it includes the initiatives taken by the company in the form of the skills, and attitudes towards work and other aspects which can be dealed under the development of the society. 2.4.3.1.
SOCIO-CULTURE FACTOR OF TATA STEEL
TATA STEEL got awarded for the commitments in the business ethical behavior and improving the lives of the employees and their families. For this purpose Tata steel got awarded by the GOLDEN PEACOCK GLOBAL AWARD. TATA STEEL also focused to create the social environment. They constantly made the improvements in the health issues, economic wellbeing and education facilities provided to the nation. This policy works out in near 800 villages in Jharkhand .Orissa and Chhattisgarh. Hospital on wheels is the basic innovation of the Tata's whereas Tata is also responsible for the habitation in slum areas in urban developing cities. 2.4.4. TECHNOLOGICAL FACTOR : Technological aspect in the pestel analysis means that how company is able to use the present technologies in the productions process it can also state as how company is using the technology for the maximum utilization of the resources. It includes the material process and it development, speed in adaption of new technology, and software up gradation in the company for the convenience. 2.4.4.1.
TECHNOLOGICAL FACTOR OF THE TATA STEEL:
Technological aspect should be always in the nature of changing as per the new circumstances. Tata steel and the sail(steel authority of India ) started the E-PORTAL system in middle of year 13
2000.thistechnology is also known as the METAL JUNCTION which is helpful for not only to Tata steel but also to entire industry. With the help of this technology e market is the biggest market for the purchasing and selling of the steel in the world. To reduce the emersions of the co2nin the environment the Tata steel is on with the research of the ultra-low carbon steel .Tata is also engaged with the objective of the energy conservation schemes where Tata is doing research to reduce the energy consumption in the production process. 2.4.5. ENVIRONMENTAL FACTOR; Environmental aspect means how the company is protecting the environment from the pollution and other factors which are harmful for the society and nature .it includes the pollution problem, waste disposal methods of the company, noise control and other factors which can be included under the environmental aspect. 2.4.5.1.
ENVIRONMENTAL FACTOR FOR THE TATA STEEL:
In the steel industry there is a major problem of the emersion of the co2 gas during the production process which is extremely harmful for the nature and human being itself. Tata steel is designing a programme in which Tata steel would be able to reduce the co2 emersion by 20 %. The DHAMRA port is the joint venture of the LASRSEN AND TOURBO and TATA STEEL. This joint venture came into existence for the protection of the Olive Ridley sea Turtles. These project is established near the Orissa .DHAMRA port is also supporting for the saving in the saltwater crocodiles as well as it is contributing the help to save the wildlife in india.it is also providing the breeding grounds for the horse shoe crabs and other rare species of the reptiles and amphibians.
2.4.6. LEGAL FACTOR: Every company is bound with some internal and external rules and regulations which is helpful for the smooth flow of the company. It also includes the international laws and regulations that company is bound to follow it also include the safety and health regulations of the employees of the company.
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2.4.6.1.
LEGAL FACTOR OF THE TATA STEEL:
The main importance is given to the employee's safety at the work place Tata steel ensures the EHS (ENVIRONMENTAL HEALTH AND SAFETY) under which the each and every employee's activity is managed by the EHS framework. Along with this positive aspect the company is also facing some legal problems. Though he Tata steel is not concern with the problem of land acquisitions in singur west Bengal it is affecting the name of Tata. Unstable government in Jharkhand and various tribal protestors are creating some legal issues for the Tata steel. It should be noted that from past 100 years the company work is not disturbed because of any kind of the strikes and internal issues. The introduction of provident fund is introduced by the Tata steel in the year1920.1920 Tata introduced the leave pay scheme to the employees which was actually applied later on in the year 1945 after the independence. Soon these schemes introduced become the legal part of the INDIAN LAW.
2.5.
Growth Strategy
Company’s long term strategy is to continue to pursue capacity expansion in India through Greenfield projects as well including Orissa, Jharkhand and Chhattisgarh projects. Therefore the India growth strategy remains a fundamental part of the long term strategy of the Tata Steel Group. The strategic levers of the Group have remained the same over the last few years. The current global economic scenario has only rephased some of these strategies in terms of timing and speed. The four levers are a) Making the European operations competitive by hastening the speed of the “Weathering the Storm” and “Fit for the Future” program. b) Quick completion of the expansion plans in India. The 3 mtpa project will be commissioned by 2011 and will add significant value to the Group. Further expansion in India through the Greenfield project in Orissa and Chhattisgarh are ongoing and their commencing will depend on ground realities and iron ore allocation. c) Investment in raw material assets to provide better raw material security especially to our European operations. 15
d) Vigourous pursuit of continuous improvement across all our operations. Despite the current slowdown in consolidation within the global steel industry, mergers and acquisitions remain a critically important business strategy for most corporates. Steel analysts are expecting a new wave of consolidation to take place in the next three years. Global giants are refocusing on positive markets by applying their resources to the core business where they are most needed. This creates opportunities to gain market share from competitors who diversify and split their focus. Acquisitions and strategic alliances are also critical to strengthen, refocus and position companies for increased growth and profitability. The Tata Steel Group is strongly pursuing its long-term strategy of acquiring and developing mining projects for its raw material security for iron ore and coking coal. The Group has been concentrating on the geographies that are logistically favorable with respect to its plants in Europe and Asia. 2.6. Raw material strategy One of the major problems faced in the steel sector is the availability of raw material. Tata Steel in India is an integrated player, for the majority of its raw material requirements. However, raw material self- sufficiency for the consolidated entity is at 25% post the Corus acquisition. It has been the stated objective of the company to increase self-sufficiency of raw materials to 50% in the medium to long term. Therefore company is acquiring new virgin sites with significant resource potential & stocks or in terms of smaller existing ventures which can be quickly aligned to the requirements in Europe. Riversdale Energy Mining Limited, holds an inferred reserve of around 4 billion tons in one tenement, in Mozambique.
2.7.
Financing & Liquidity Strategy
For the global financial crisis, the company responded very quickly on many fronts and financing was certainly one of them. Recognising the uncertain financing environment and the fragile state of the global banking industry, company has focussed on both internal and external levers. Primary importance is placed on conserving liquidity through reduced spend management and sharp reduction in working capital levels. Also focus is given on improvement in the 16
productivity levels and reduction in overheads. On capital expenditure, company has reprioritised on the most value creating and critical projects and reworked the capital planning strategy. On the external front, long term capital are raised which acts as a liquidity buffer in the current circumstance. The above actions ensured that the Tata Steel Group had adequate liquidity and also financial flexibility for growth and exigencies. 2.8.
Cost leadership & Differentiation Strategy
2.9.
Present Strategic Issues
-
-
2.10.
Global Leader/presence both in means of
Quality and Quantity. Security & procurement of raw materials Entering the new markets Eliminating the RED color from balance sheet Struggle to digest the big ticket global acquisitions Leadership crisis within the company
Strategic focus
The strategic focus of the Company has been to increase the steelmaking capacity in excess of 50 million tons by 2015 through organic and inorganic growth. The key enablers identified to achieve the strategic goal and to build a sustainable value centric culture are: 17
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2.11.
Being the employer of choice Oneness with the society Leadership & talent management Adaptability to changes in the external environment Security of raw materials Research & development and technological upgradation. Branding Financial prudence through capital stewardship &
performance
management. Strategic Business Units
Apart from the main Steel Division, Tata Steel's operations are grouped under the following Strategic Business Units: 1. Bearings Division: Manufactures ball bearings, double row self-aligning bearings, magneto bearings, clutch release bearings and tapered roller bearings for two wheelers, fans, water pumps, etc. 2. Ferro Alloys and Minerals Division: Operates chrome mines and has units for making ferro chrome and ferro manganese. It is one of the largest players in the global ferro chrome market. 3. Agrico Division: Tata Agrico is the first organised manufacturer in India of hand tools and implements for application in agriculture. 4. Tata Growth Shop (TGS): Has designed, developed, manufactured, erected and commissioned thousands of tonnes of equipment ranging from overhead cranes to high precision components, including a rocket launch pad for the Indian Space and Research Organisation. 5. Tubes Division: The biggest steel tube manufacturer with the largest market share in India, it aspires to strengthen its market presence by expanding and modernising its commercial and precision tube manufacturing capacity. 6. 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
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Sri Lanka. Joint Ventures, Mergers & Acquisitions 1. Corus: Europe’s second largest steel maker with operations in the UK and mainland Europe and over 40,000 employees worldwide. It’s long and strip products cater to the construction, automotive, packaging, and engineering and other markets worldwide. Corus’s takeover was the one of the biggest merger in steel industry for which TATA was paying 608 pence per share which is seven times of is original value. 2. Tinplate Company of India Limited (TCIL): With a market share of over 35%, it is the industry leader in India. 3. Tayo Rolls Limited: India's leading roll manufacturer and supplier, the company produces rolls which find application in integrated steel plants. 4. Tata Ryerson Limited (TRYL): TRYL Is in the business of steel processing and distribution. 5. Tata Refractories Limited (TRL): It produces High Alumina, Basic, Dolomite, Silica and Monolithic Refractories and offers design, procurement and re-lining applications services. 6. Tata Sponge Iron Limited (TSIL): TSIL is the first Indian sponge iron plant based on Tata Steel's Direct Reduction Technology. 7. Tata Metaliks: Amongst the top wealth creating companies (EVA+) in the country, Tata Metaliks is engaged in the business of manufacturing and selling foundry grade pig iron. 8. Tata Pigments Limited: TPL's range of products includes oxides of iron, dry cement paint, exterior emulsion paint and distemper. 9. Jamshedpur Injection Powder Limited (Jamipol): JAMIPOL manufactures carbide desulphurising compounds which are used for de-sulphurising hot metal for the production of lowsulphur, high-quality steel. 10. TM International Logistics Limited (TMILL): TMILL provides material handling and port operation services at Haldia and Paradip Ports.
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11. Mjunction services limited: Mjunction, operating at the cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is India's largest eCommerce company and the world's largest eMarketplace for steel. 12. TRF Limited: TRF, one of India's leading companies in the business of design, manufacture, supply, installation and commissioning of engineered-to-order equipment and systems in the areas of bulk material handling, processing, reclaiming and blending. 13. Jamshedpur Utility and Service Company Limited (JUSCO): Re-engineered out of Tata Steel's town services, JUSCO is a wholly owned subsidiary of Tata Steel and is the country's first enterprise that provides municipal and civic services for townships. 14. The Indian Steel and Wire Products Limited (ISWP): Recently acquired by Tata Steel, ISWP has two units - a wire unit comprising wire drawing mills, wire rod mills and a fastener division. 15. Tata BlueScope Steel Limited: A joint venture with BlueScope Steel Limited, Australia, Tata BlueScope Steel Limited offers a comprehensive range of branded steel products for building and construction applications. 16. Dhamra Port Company, Orissa: A JV between Larsen & Toubro Ltd. and Tata Steel Ltd., the company will build a deep-draft (18 mtr) all weather port on the east coast of India. 17. Hooghly Met Coke & Power Co.: A joint venture with West Bengal Industrial Development Corporation Ltd., HMC&PC envisages an annual met coke production capacity of 1.2 million tons and 90 MW of electric power. 18. Lanka Special Steel Limited: The only unit in Sri Lanka manufacturing galvanised wires. 19. Sila Eastern Company Limited: Established to develop limestone mines in Thailand, mainly for the captive use of Tata Steel. 20. NatSteel Holdings (NSH): A leading supplier of premium steel products for the construction industry. NatSteel Holdings became a 100% subsidiary of Tata Steel in February 2004. 21. Tata Steel Thailand: The Company is the dominant steel producer in Thailand. The company has the capacity to produce 1.7 million tons of steel for the construction industry per year. 20
22. Tata Steel KZN: Proposes to set up high carbon ferrochrome plant in South Africa. 23. Tata NYK : A joint venture with Nippon Yusen Kabushiki Kaisha (NYK Line) for setting up a shipping company to cater to dry bulk and break bulk cargo.
3. DISCUSSION AND CONCLUSIONS Tata Steel has set ambitious target to possess 50 million tonne per annum capacity by 2015.
Overseas acquisition till now add up to 21.4 million tonne, which includes Corus production at 18.2 million tonne, Natsteel production at two million tonne and Millennium Steel production at 1.2 million tonne. Company is looking to add another 29 million tonnes through the acquisition route.
Company has lined up a series of Greenfield projects in India and outside which includes
1
6 million tonne Plant in Orissa
2
12 million tonne in Jharkhand 21
3
5 million tonne in Chhattisgarh
4
3-million tonne plant in Iran
5
2.4-million tonne plant in Bangladesh
6
5 million tonne capacity expansion at Jamshedpur
7
4.5 million tonne plant in Vietnam (feasibility studies underway)
It’s expected that Tata Steel will rise to 4th position in the next 5 years just behind POSCO, NIPPON and MITTAL ARCELOR. Beyond 2009 and up to 2012 its growth rate is expected to be 5 million tonnes per year average. By 2012 Tata Steel is expected to have a turnover of US $ 24 billion or Rs.120.000 crores and Net profit of US $ 5 billion or Rs. 25000 crores. Tata Steel has provided many examples of how business-community relations are approached by the private sector in India at the present time. Summaries of Tata initiatives reveal that the company is working to improve both “before” and “after-profit” practice. Corporate governance is being tackled through increased transparency in business operations, illustrated in the establishment of an Audit Committee. The Tata Code of Conduct also means that the company holds certain principles, based on value judgements that influence its policies and procedures. One result of this has been the adoption of various organisational structures that are responsible for targeting particular issues, such as the Family Welfare and Environmental Management Department. Moreover, Tata Steel has seemingly pushed back the boundaries of what is expected from “corporate social responsibility” (CSR) in India at this time. Not only has it given donations to local education, health and sports projects, but it has also demonstrated longer-term commitment in theestablishment of the Tata Council for Community Initiatives (TCCI). Its participation in the Global Business Coalition to raise awareness of HIV/AIDS has earned international recognition over a sustained period. This is indicative of a move towards “social investment,” which heralds a more serious commitment to CSR than donations or sponsorship.
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In short, a business might not have the technical or sociological knowledge to implement a successful community project. Moreover, the community does need to have some opportunity to voice their complaints, for these to be heard and then challenged by way of a community project – although it is worth bearing in mind that often those who are able to “speak out” are not powerless. 11 Tata’s paternal “adoption” of communities is therefore worrying, the implication being that the “targeted” communities have minimal input into their future relations with the company. Although Tata Steel’s initiatives have served communities on many levels, a means of enhancing business-community relations in the future would require communication between both sectors, when both parties are able to contribute to project selection and planning procedures.
BIBILIOGRAPHY www.tatasteel.com www.businessworld.in www.beginnersinvest.about.com www.tutor2u.net http://www.economywatch.com/business-and-economy/steel-industry.html http://www.steelonthenet.com/production.html, http://www.steelonthenet.com/production.html 23
http://www.tatasteelindia.com/corporate/vision-and-strategy.asp http://www.tatasteel.com/investors/annual-report-2012-13/html/mda8.html http://www.slideshare.net/dimpisanghavi/tata-steel-analysis http://www.tatasteel.com/investors/annual-report-2012-13/html/strat_obj.html http://www.tatasteel.com/investors/annual-report-2012-13/html/outlook.html http://www.tatasteel.com/investors/performance/key-facts.asp http://www.ukessays.com/essays/marketing/market-strategy-and-analysis-for-tata-steel-groupmarketing-essay.php http://www.scribd.com/doc/34826003/Applying-Management-Strategy-Concepts-SFI-on-TataSteel-Company-Tata-Group http://www.dnaindia.com/money/report-to-beat-gloom-tata-steel-europe-to-double-customproducts-1839907 http://www.tatasteel.com/investors/annual-report-2012-13/html/org_overview2.html http://www.ukessays.com/essays/business/tata-steel.php
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