FPO Analysis
PF / FPON / 18012011 / 655
18 January 2010
Issue Highlights:
Issue Open: Jan 19th 2011
Issue Close: Jan 21st 2011
Issue Size (Shares): 57,000,000
Issue Size (Rs.): Rs 3,385.8 – Rs 3,477 Crores
Price Band: Rs.594 - Rs 610
Face Value: Rs. 10
Bid Size: 10 Shares
Issue Allocation:
Employee Reservation portion: 15, 000, 00
QIB (Shares): 27,750,000
Non Institutional (Shares): 8,325,000
Retail (Shares): 19,425,000
Share Holding Pattern:
Pre Issue
Equity 902,214,196
Shares
outstanding
BRLMs:
Kotak Mahindra Capital Company Limited
CITIGROUP GLOBAL MARKETS INDIA PVT LTD
DEUTCHE EQUITIES (INDIA) PVT LTD
HSBC SECURITIES AND CAPITAL MARKETS (INDIA)
PVT LTD
RBS EQUITIES (INDIA) LIMITED
SBI CAPITAL MARKETS LIMITED
STANDARD CHARTERED SECURITIES (INDIA)
LIMITED
Registrar:
LINK INTIME INDIA PRIVATE LIMITED
Bankers to the Issue:
Axis Bank Limited
HDFC Bank Limited
ICICI Bank Limited
Listing:
BSE & NSE
Call us at 1800 425 8282
About the Issuer
Brief Introduction:
Tata Steel was established in 1907 by Jamsetji N.Tata,
founder of Tata Group. And is one of the flagship companies
of the group.The company has presence in more than 26
countries. According to WSA, Tata Steel was the seventh
largest steel company in the world in 2009. The Company is
also one of the most geographically diversified steel
producers, with operations in 26 countries and a commercial
presence in more than 50 countries. As of March 31, 2010,
the Company had approximately 81,000 employees. The
Company has grown significantly in recent years with its steel
production capacity increasing from approximately 5.0 mtpa
in Financial Year 2006 to 27.2 mtpa currently. The Company
offers a broad range of steel products including a portfolio of
high value-added downstream products such as hot rolled
coils, sections, plates and wires. The Company is also a large
producer of ferro chrome in India. The Company’s main
markets for its products are Europe and India, which
Post Issue accounted for approximately 72.6% of the Company’s net
sales in Financial Year 2010, with the remaining sales
959,214,196
primarily taking place in other markets in Asia and in North
America. The Company’s customers primarily comprise the
construction, automotive, aerospace, consumer goods and
material handling and general engineering industries.
Investment Rationale:
The company is one of the world’s largest steel companies.
The company has global presence and it has a strong base in
a growing market like India. As a member company of Tata
Group, It also gets benefited with the brand name of Tata
Group. The company’s acquision of Corus Group in 2007
contributed to the increase in the capacity of the company.
Company’s presence across the value chain of steel
manufacturing is also a positive factor.
Key Strategies:
a. Increase capacity in India.
b. Increase Raw Materials Security.
c. Increase sales of High Value-Added Products.
d. Enhance Competitiveness through continuous
improvement.
e. Control over Logistics.
f. Strategic Alliances with Joint Venture Partners.
Key Strengths:
a. Global Scale.
b. Strong position in Indian market.
c. Strong position in Western Europe.
d. Cost Competitiveness of the company’s Indian
Operations.
e. Diversified Product offering.
f. Efficient Project implementation.
g. Economies of Scale and Cost Reductions.
h. Experienced Management team.
Tata Steel 1
 FPO Analysis
PF / FPON / 18012011 / 655

18 January 2010

Financial Analysis:
Revenue:

Revenue of the company increased from 204,583.9 million in

2006 to 567136.1 million in 2010 at a CAGR of 29.0339%.

EBITDA:

EBITDA of the company decreased from 63753.5 million in 2006

to 62064.3 million in 2010 at a CAGR of -0.67%.

Net Profit:

Net profit of the company decreased from 37057.3 million in

2006 to -20147.4 million in 2010 at a CAGR of 0.62%.

Objects of the Issue:

The objects of the issue are as below.
a. Part-finance the Company’s share of capital expenditure
for expansion of existing works at Jamshedpur.
b. Payment of redemption amounts on maturity of certain
redeemable non-convertible debentures issued by the
company on a private placement basis.
c. General corporate purposes.

Comparison with Industry peers:

Company Face EPS P/E Ratio NAV RONW
name Value (Rs) (%) (Rs) (%)
(Rs)

Tata
10 57.3 418.9 13.4
Steel

JSW Steel
10 10 13.5 662.3 23.3
Limited

SAIL 10 10 12.2 80.7 22

Bhushan
10 10 11.4 186.2 28.2
Steel Ltd

Call us at 1800 425 8282 Tata Steel 2

 FPO Analysis
PF / FPON / 18012011 / 655

18 January 2010

STATEMENT OF RESTATED PROFIT AND LOSS ACCOUNT (Amount Rs. in million)

Period / Year Ended
Particulars 6 month 12 month 12 month 12 month 12 month 12 month
Sep 30 2010 2010 2009 2008 2007 2006
INCOME
Sales and Other Operating Income 570,522.3 1,042,298.3 1,499,849.4 1,340,867.7 274,420.8 222,681.6
Less: Excise Duty 12,123.5 18,367.1 26,556.8 25,531.4 22,249.1 19,500.0
Net Income from Operations 558,398.8 1,023,931.2 1,473,292.6 1,315,336.3 252,171.7 203.181.6
Other Income 8,737.3 11,858.5 2,656.7 4,758.6 2,145.7 1,402.3
Total Income 567,136.1 1,035,789.7 1,475,949.3 1,320,094.9 254,317.4 204,583.9

EXPENDITURE
Cost of Materials 244,843.3 440,915.3 729,376.5 602,286.9 91,769.1 67,107.4
Accretion/(Reduction) in Stocks of Finished (17,186.9) 6,600.4 19,762.2 (16,491.5) (5,402.2) (470.0)
and Semi Finished Products
Payment to and provision for Employees 76,046.0 164,629.9 179,750.6 168,995.7 20,380.0 17,266.6
Manufacturing, selling and other expenses 173,647.2 331,359.0 363,126.6 382,720.9 72,453.6 56,375.5
Net Finance Charges 12,613.0 30,220.6 32,901.8 40,854.1 1,876.9 550.9
Depreciation 21,220.4 44,917.3 42,653.9 41,369.5 10,109.5 8,603.7
Total 511,183.0 1,018,642.5 1,367,571.6 1,219,735.6 191,187 149,434
P/(L) Before Exceptional Items and Tax 55,953.1 17,147.2 108,377.7 100,359.3 63,130.2 55,149.8
Exceptional Items
Restructuring costs (914.6) (16,837.2) (40,945.3)
Contribution for Sports Infrastructure (1,500.0)
Exchange gain 5,782.9
Actuarial Gain 59,068.4
P/(L) After Exceptional Items Before Tax 55,038.5 310.0 67,432.4 163,710.6 63,130.2 55,149.8
Provision for Taxes
Current Tax 13,909.7 21,625.7 19,971.2 33,537.3 21,455.2 16,199.7
Deferred Tax 3,544.6 (106.9) (1,219.3) 6,745.8 (155.2) 1,449.2
Fringe Benefit Tax 188.1 209.9 174.1 289.9
Net Profit/(Loss) After Tax Before 37,584.2 (21,208.4) 48,492.4 123,217.6 41,656.1 37,210.7
Adjustments
Adjustments (65.4) (77.7) (14,483.1) (48,650.5) (386.2) (284.1)
Net Profit/(Loss) after Adjustments 37,518.8 (21,286.1) 34,009.1 74,567.1 41,269.9 36,926.6
Less: Minority Interest (40.4) 129.9 (425.3) 1,403.4 671.6 191.2
Add: Share of profits of Associates 418.8 1,268.6 607.2 1,681.6 791.8 321.9
Profit/(Loss) as Restated after Minority 37,978.0 (20,147.4) 35,041.8 74,845.3 41,390.1 37,057.3
Interest and Share of Profits of
Associates

Call us at 1800 425 8282 Tata Steel 3

 FPO Analysis
PF / FPON / 18012011 / 655

18 January 2010

STATEMENT OF RESTATED ASSETS AND LIABILITIES (Amount Rs. in million)

Year / Period Ended
6 month 12 month 12 month 12 month 12 month 12 month
Particulars
Sep 30
31-Mar-10 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06
2010
A. ASSETS
Fixed Assets:
Gross Block 1,006,428.4 972,890.0 994,586.7 962,293.5 200,837.8 166,306.8
Less: Depreciation 609,584.7 579,028.5 598,580.9 599,389.2 90,892.1 71,058.0
Less: Impairment 29,593.1 28,609.6 31,830.4 31,717.0 1,004.1 941.9
Net Block (A) 367,250.6 365,251.9 364,175.4 331,187.3 108,941.6 94,306.9
Capital work in Progress 122,312.1 92,706.4 88,883.2 88,475.6 33,263.7 13,574.1
Total 489,562.7 457,958.3 453,058.6 419,662.9 142,205.3 107,881

B. Goodwill on Consolidation 150,393.1 145,418.2 153,649.2 180,499.6 2,196.6 1,140.0

C. Investments 47,155.9 54,177.9 64,111.0 33,674.3 164,975.0 34,789.0
D. Current Assets, Loans and Advances:
Inventories 253,479.3 186,866.4 216,684.2 230,643.4 38,881.3 27,733.1
Sundry Debtors 116,477.6 115,124.4 129,535.3 185,583.4 16,865.3 12,187.2
Cash and Bank Balances 71,465.8 68,151.1 61,483.6 42,318.6 108,879.6 7,767.5
Deferred Tax Asset 1,819.6 1,488.3 1,074.0 297.0 69.3 16.2
Interest Accrued on Investments 64.5 76.3 68.1 89.6 11.6 11.0
Loans and Advances 83,259.4 68,459.7 130,768.3 155,822.9 19,633.4 11,371.8
Total 526,566.2 440,166.2 539,613.5 614,754.9 184,340.5 59,086.8

E. Liabilities and Provisions:

Secured Loans 289,170.6 280,593.3 342,438.8 354,149.9 49,612.3 25,033.9
Unsecured Loans 270,201.3 250,410.2 256,566.2 182,097.5 199,643.0 8,740.4
Deferred Tax Liability 20,979.3 18,029.4 18,168.3 24,841.2 7,928.7 9,938.0
Minority Interest 9243.0 8,843.4 8,974.0 8,368.2 6,021.1 1,276.6
Warrants Issued by a Subsidiary Company 174.6 174.6 174.6 174.6 174.6
Provision for Employee Separation Compensation 9,167.7 9,636.7 10,424.1 10,800.5 11,183.0 14,025.6
Current Liabilities 270,983.3 233,787.8 230,717.4 263,328.0 54,407.7 32,308.7
Provisions 66,342.1 65,974.1 71,479.7 64,504.3 20,636.6 10,946.6
Total (D) 936,261.9 867,449.5 938,943.1 908,264.2 349607 102,269.8

NET WORTH (A+B+C+D-E) 277,416.0 230,271.1 271,489.2 340,327.5 144,110.4 100,627.0

IMPORTANT: Please read the Red Herring Prospectus of this issue carefully before investing in the same.
Disclaimer :: Research Team ::
The information and views presented in this report are prepared by Karvy Stock Broking Limited. The
information contained herein is based on our analysis and upon sources that we consider reliable. We,
Pradeep Kumar S.
however, do not vouch for the accuracy or the completeness thereof. This material is for personal Neelima Bajaj
information and we are not responsible for any loss incurred based upon it. The investments discussed Santosh Rudrabhatla
or recommended in this report may not be suitable for all investors. Investors must make their own
investment decisions based on their specific investment objectives and financial position and using E-mail: pradeep.s@karvy.com
such independent advice, as they believe necessary. While acting upon any information or analysis Direct Ph: 040 4467 7542
mentioned in this report, investors may please note that neither Karvy nor Karvy Stock Broking nor Ph: 040 23312454 Ext: 7542
any person connected with any associate companies of Karvy accepts any liability arising from the use
of this information and views mentioned in this document. Production: Raju A

Call us at 1800 425 8282 Tata Steel 4