Fundamental Analysis Idfc, Tata Steel

ECONOMIC ANALYSIS

GDP

Inflation

Fiscal Deficit

Interest Rates

Monetary Policy

INDUSTRY ANALYSIS

Banking

Demand Prospects Untapped Rural Market Strong Village Loan Demand Congresses Pledge for Development

Policy of Government Rs 100 cr one-time grant to expand

banks in unbanked areas Banks and insurance firms to remain in public sector IIFCL to re-finance commercial bank loans up to 60 per cent in critical objects through PPP to tune of Rs 1,00,000 cr

Product Differentiation  Central Bank  Public Sector Banks  Private Sector Banks Old generation private banks New generation private banks Foreign banks operating in India Scheduled co-operative banks Non-scheduled banks

 Co-Operative Banks State co-operative Banks Central co-operative banks Primary Agriculture Credit Societies

 Development Banks/ Financial Institutions

Competition

IDFC – Industrial Development Finance Company

COMPANY ANALYSIS

Growth Of The Company

Financial Ratios

Quality of Management

Share Price Trend

INDUSTRY ANAYLYSIS

STEEL

PURPOSE The purpose of industry analysis is to review

prevailing conditions within specific industry and its segments. The company's industry obviously influences

the outlook for the company.

“It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry.”

Market Scenario After liberalization, there have been no

shortages of iron and steel materials in the country. Apparent consumption of finished (carbon) steel increased from 14.84 Million Tonnes in 1991-92 to 43.471 million tonnes in 200607. China has been an important export destination for Indian steel. The steel industry is buoyant due to strong growth in demand particularly by the demand for steel in China.

Government Policy on Steel Industry New Industrial Policy, July1991 - Iron and

Steel industry, removed from the public sector and exempted from the provisions of compulsory licensing. From 24.5.92, Iron and Steel industry has

been included in the list of `high priority' industries for automatic approval for foreign equity investment upto 51%. This limit has been recently increased to 74%.

Iron & Steel are freely exportable

Budget Measures Steel melting scrap will be exempt from

customs duty Excise duty reduction in select segments of

automobile manufacturing Continuation of power sector reforms Dividend tax paid by parent company

allowed to be set off against the same paid by its subsidiary

 Budget Impact Reduction in customs duty on scrap will help

steel manufacturers that use the electric arc furnace route for steel manufacturing lower their costs. auto manufacturers pass on the reduced

excise benefits in the form of lower prices, it helps spur demand for automobiles, which in turn will drive steel demand.

Increased investment in the power sector

will also help boost demand for steel

 Company Impact Reduction in excise duties on automobiles

will help companies that supply steel to auto makers. Key beneficiary would be Tata Steel. Players that supply steel to the power

equipment companies like SAIL and JSW Steel will benefit from increased investments in the power sector.

Better access to coal mines will be a positive

for all the players that do not have their own captive mines

SWOT Analysis Strengths Availability of iron ore and coal Low labour wage rates Abundance of quality manpower Mature production base

Weaknesses Unscientific mining Low productivity Coking coal import dependence Low R&D investments High cost of debt Inadequate infrastructure

SWOT Analysis Opportunities Unexplored rural market Growing domestic demand Exports Consolidation

Threats China becoming net exporter Protectionism in the West Dumping by competitors

ROBUST SECTOR WISE GROWTH AUTOMOBILE

CONSUMER DURABLES

Source: Tata Steel

CAPITAL GOODS

CONSTRUCTION

INCREASE INVESTMENT IN INFRASTRUCTURE SEGMENT India has potential to absorb US $ 150 billion in next five years in the infrastructure sector.

28

Source: Ministry of Commerce, Govt. of India

6 MAJOR PRODUCERS ACCOUNT FOR 66% OF TOTAL FINISHED PRODUCTION

29

All fig in million tonnes Source : JPC, Team Analysis

INDIA WOULD EMERGE AS A GLOBAL HUB

India to play the Key role in Steel Market dynamics 30

COMPANY ANALYSIS TATA STEAL

Profit & Loss A/C

Balance Sheet

Ratios

Share Price Trend

Key Management Personnel

Background Tata Steel was earlier known as Tata Iron &

Steel Company or TISCO.It was established in 1907. It represents the country's single largest, integrated steel plant in the private sector. Company has a wide product portfolio, which

includes flat and long steel, tubes, bearings, Ferro-alloys and minerals as well as cargo handling services. Tata Steel ranks 34th in the world in size.

Turnover for 2007 Tata Steel India

- Rs 472 crore Tata Steel UK - Rs 23,867 crore Tata Steel Thailand - Rs 554 crore Group turnover registered an increase of Rs 2,157 crore. The increase in Tata Steel’s India operations

was primarily due to increase in prices , whereas the rise in Natsteel and Tata Steel Thailand was attributed to increase in price

How fast is the company growing ? Companies are judged by their sales and

earnings growth rates than on the absolute value of their sales and earnings. Profit 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 0.00

4,222.15 3,474.16 3,506.38

1,746.22 1,012.31

2003

2004

2005

2006

2007

Sales Chart 25,000.00 15,871.08 17,140.24

20,000.00 15,000.00 10,000.00

9,793.27

19,757.80

11,920.96

5,000.00 0.00 2003

2004

2005 Y ear

2006

2007

Share Holding

26%

Foreign Holdings

18%

Govt. / Financial Institutions

22%

30%

4%

Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public

CONCLUSION  Sales, EPS, Book value, Net Profit Ratio are

increased in 2007 as compared to 2006 and 2005. BUT Company should concentrate on PE Ratio because it has decreased in 2007.  The debt-equity ratio is decreased which is good

sign and under controlled which is good sign.

 The investor of this company should buy and hold

the shares of this company for long period because this company can give good dividend and investor can get arbitrage profit for short period of time.