Fa Report Neha

8/3/2019 Fa Report Neha

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Project

on

Financial accounting

SUBMITTED TO:- SUBMITTED BY:-

M/s Gunjan Mehta Neha Kumari Shaw

PG20101253


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Company profile

TATA STEEL

Tata steel has always believed that the principal 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 capacity of over 28 million tons per annum (mpta). It is now one of the

worlds most geographically- diversified steel producers, with operations in 26

countries

The Tata steel group, with a turnover of US$ 22.8 billion in FY10 has over 80,000

employees across five continents and is a fortune 500 company.

Tata steels vision is to be the worlds steel industry benchmark through the excellence

of its people, its innovative approach and overall conduct. Underpinning this vision is

a performance culture committed to aspiration target, safety and social

responsibilities, continuous improvement, openness and transparency.

Tata steels larger production facilities include those in India, the UK, the Netherlands,

and Thailand, Singapore, china and Australia. Operating companies within the group

include Tata steel limited (India), Tata steel Europe limited (formerly Corus), NatSteel,

and Tata steel Thailand (formerly millennium steel).


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Corporate governance:

The companys corporate governance philosophy: The objective of company has set

itself of expanding its capabilities and becoming globally competitive in its business.

As a part of its growth strategy, the company believes in adopting the best practices

that are followed in area of corporate governance across various geographies. The

company emphasizes the need for full transparency and accountability in all its

transaction, I order to protect the interests of its stakeholders. The board considers

itself as a trustee of its shareholder and acknowledges its responsibilities towards

them for creation and safeguarding their wealth.

The company has a nonexecutive chairman and the number of independent director

is 50% of the total number of director.

As on 31 march, 2011 the company gas 12 directors on its board, of which 6 directorsare independent. The number of non executive directors (NED) is more than 50 % of

the total number of directors.

Audit committee:

The company had constituted an audit committee in the year 1986.

Terms of reference of the Audit Committee are broadly as follows:

a. To review compliance with internal control systems;b. To review the findings of the Internal Auditor relating to various functions of the

Company.

c. To hold periodic discussions with the Statutory Auditors and Internal Auditorsof the Company concerning the accounts the Company, internal control

systems, scope of audit and observations of the Auditors/Internal Auditors.


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d.To review the quarterly, half-yearly and annual financial results of the

Company before submission to the Board.

e. To make recommendations to the Board on any matter relating to the financialmanagement of the Company, including Statutory & Internal Audit Reports.

f. Recommending the appointment of statutory auditors and branch auditors andfixation of their remuneration.

Remuneration Committee

The Company had constituted a Remuneration Committee in the year 1993. The broad

terms of reference of the Remuneration

Committees are as follows:

a) . Review the performance of the Managing Director and the Whole-timeDirectors, after considering the Companys performance.

b) . Recommend to the Board remuneration including salary, perquisites andcommission to be paid to the Companys Managing Director and Whole-time

Directors.

c) Finalize the perquisites package of the Managing Director and Whole-timeDirectors within the overall ceiling fixed by the Board

d) Recommend to the Board, retirement benefits to be paid to the ManagingDirector and Whole-time Directors under the Retirement Benefit Guidelines

adopted by the Board.


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Balance sheet of Tata steel:

Balance Sheet of Tata Steel . In crore..

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Sources Of Funds

Total Share Capital 959.41 887.41 6,203.45 6,203.30 580.67

Equity Share Capital 959.41 887.41 730.79 730.78 580.67

Share Application Money 178.2 0 0 0 147.06

Preference Share Capital 0 0 5,472.66 5,472.52 0

Reserves 47,307.02 36,281.34 23,501.15 21,097.43 13,368.4

Revaluation Reserves 0 0 0 0 0

Net worth 48,444.63 37,168.75 29,704.60 27,300.73 14,096.1

Secured Loans 2,009.20 2,259.32 3,913.05 3,520.58 3,758.92

Unsecured Loans 26,291.94 22,979.88 23,033.13 14,501.11 5,886.41

Total Debt 28,301.14 25,239.20 26,946.18 18,021.69 9,645.33

Total Liabilities 76,745.77 62,407.95 56,650.78 45,322.42 23,741.4Application Of Funds Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Gross Block

Less: Accum. Depreciation 22,846.26 22,306.07 20,057.01 16,479.59 16,029.4

Net Block 11,041.16 10,143.63 9,062.47 8,223.48 7,486.37

Capital Work in Progress 11,805.10 12,162.44 10,994.54 8,256.11 8,543.12

Investments 6,969.38 3,843.59 3,487.68 4,367.45 2,497.44

Inventories 46,564.94 44,979.67 42,371.78 4,103.19 6,106.18

Sundry Debtors 3,953.76 3,077.75 3,480.47 2,604.98 2,332.98

Cash and Bank Balance 428.03 434.83 635.98 543.48 631.63

Total Current Assets 512.76 500.3 463.58 465 446.51

Loans and Advances 4,894.55 4,012.88 4,580.03 3,613.46 3,411.12

Fixed Deposits 16,814.04 6,678.55 5,884.61 34,582.84 4,025.95


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Total CA, Loans & Advances 3,628.78 2,733.84 1,127.02 0.04 7,234.84

Deffered Credit 25,337.37 13,425.27 11,591.66 38,196.34 14,671.9

Current Liabilities 0 0 0 0 0

Provisions 10,383.04 8,699.34 8,965.76 6,842.26 6,349.24

Total CL & Provisions 3,547.98 3,303.68 2,934.19 2,913.52 1,930.46

Net Current Assets 13,931.02 12,003.02 11,899.95 9,755.78 8,279.70

Miscellaneous Expenses 11,406.35 1,422.25 -308.29 28,440.56 6,392.21

Total Assets 0 0 105.07 155.11 202.53

Contingent Liabilities 76,745.77 62,407.95 56,650.78 45,322.42 23,741.4

Book Value (Rs) 12,582.24 13,184.61 12,188.55 9,250.08 7,185.93

503.19 418.94 331.68 298.78 240.31

Profit & Loss Account of Tata Steel:

Profit & Lossaccount of TataSteel ------------------- in Rs. Cr. -------------------


Income

Sales Turnover 31,901.94 26,757.60 26,843.53 22,191.43 19,756.84

Excise Duty 2,594.59 1,816.95 2,495.21 2,537.02 2,304.18

Net Sales 29,307.35 24,940.65 24,348.32 19,654.41 17,452.66Other Income 1,435.80 1,241.08 603.07 586.41 362.12

StockAdjustments 173.65 -134.97 289.27 38.73 82.47

Total Income 30,916.80 26,046.76 25,240.66 20,279.55 17,897.25

Expenditure

Raw Materials 9,395.92 8,356.45 8,568.71 6,063.53 5,762.42


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Power & FuelCost 1,558.49 1,383.44 1,222.48 1,038.77 1,027.84

Employee Cost 2,618.27 2,361.48 2,305.81 1,589.77 1,454.83

OtherManufacturingExpenses 2,905.16 2,419.89 2,127.48 1,654.96 1,561.40

Selling and AdminExpenses 501.96 417.9 400.24 247.77 244.92

MiscellaneousExpenses 1,529.73 1,287.04 1,180.08 1,029.30 805.99

Preoperative ExpCapitalised -198.78 -326.11 -343.65 -175.5 -236.02

Total Expenses 18,310.75 15,900.09 15,461.15 11,448.60 10,621.38

Profit & Lossaccount of TataSteel ------------------- in Rs. Cr. -------------------


Operating Profit 11,170.25 8,905.59 9,176.44 8,244.54 6,913.75

PBDIT 12,606.05 10,146.67 9,779.51 8,830.95 7,275.87

Interest 1,686.27 1,848.19 1,489.50 929.03 251.25

PBDT 10,919.78 8,298.48 8,290.01 7,901.92 7,024.62

Depreciation 1,146.19 1,083.18 973.4 834.61 819.29

Other Written Off 0 0 0 0 0

Profit Before Tax 9,773.59 7,215.30 7,316.61 7,067.31 6,205.33

Extra-ordinaryitems 0 0 0 0 57.29

PBT (Post Extra-ord Items) 9,773.59 7,215.30 7,316.61 7,067.31 6,262.62

Tax 2,912.44 2,168.50 2,114.87 2,380.28 2,040.47Reported NetProfit 6,865.69 5,046.80 5,201.74 4,687.03 4,222.15

Total ValueAddition 8,914.83 7,543.64 6,892.44 5,385.07 4,858.96


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PreferenceDividend 0 45.88 109.45 22.19 0

Equity Dividend 1,151.06 709.77 1,168.95 1,168.93 943.91

CorporateDividend Tax 156.71 122.8 214.1 202.43 160.42

Per share data (annualised)

Shares in issue(lakhs) 9,592.14 8,872.14 7,305.92 7,305.84 5,804.73

Earning Per Share(Rs) 71.58 56.37 69.7 63.85 72.74

Equity Dividend(%) 120 80 160 160 155

Book Value (Rs) 503.19 418.94 331.68 298.78 240.31

Dividend policy

The dividend policy of a firm determines what proportion of earnings is paid to

shareholders by way of dividends and what proportion is ploughed back in the firm for

reinvestment purpose

Dividend per share = 12.00%

Earnings per share = 71.58

Dividend payout ratio(%) = (12/71.58)* 100

= 16.76 % (for year 2011)

Year Dividend per

share

Earnings per share Dividend payout

ratio (%)

2006-07 15.50 72.74 21.30


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2007-08 16.00 63.85 25.05

2008-09 16.00 69.70 22.95

2009-10 8.00 56.37 14.14

2010-11 12.00 71.58 16.76

Profitability Ratios:

Profitability ratios measure the degree of operating success of a company. The only

reason why investors are interested in a company is that they will earn a reasonable

return in the form of capital gain and the dividends on their investment. Therefore

they are keen to learn about the ability of the company to earn revenues in excess of

its expenses.

The commonly used ratios to evaluate profitability are:

Profit margin Asset turn over Return on assets Return on equity Earnings per share

Profit margin: it is also known as return on sale (ROS) measure the amount of

net profit earned by each rupee of revenue. Here we compute Tata steel profit margin

ratio.

Profit margin = profit after tax/ sales *100


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Year 2011 Year 2010

Profit after tax 6,865.69 5,046.80

Sales 31,901.94 26,757.60

Profit margin = 6,865.69/31,901.94 *100

= 21.52 (Year 2011)

= 5046.80/26757.60*100

= 18.86

Asset turn over: This is a measure of a firm efficiency in utilizing its assets. It

indicates how many times the assets were turn over in a period and there by

generated sales. If assets turnover is high the company managing its assets efficiently.

If it is low, its means the company has more assets than its really needs for its

operations.

Year 2011 Year 2010

Average total assets 69576.86 59529.365

Sales 31,901.94 26,757.60

Asset turnover = sales/ average total assets

= 31901.94/69576.86

= 0 .45(2011)

= 26757.60/59529.365

= 0.44(2010)


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Return on assets or return on investment: This is a measure of

profitability from a given level of investment. It is an excellence indicator of overall

performance of a company.

Year 2011 Year 2010

Profit after tax 6,865.69 5,046.80

Average total assets 69576.86 59529.365

Return on assets = profit after tax/ average total assets *100

= 6865.69/69576.86 *100

= 9.86

= 5046.80/59529.365*100

= 8.47

Return on equity:This is a measure of profitability from the standpoint of thecompanys shareholders. Its measure the efficiency with which shareholders funds are

employed.

Return on equity = profit after tax/ average shareholders equity *100

Earnings per share: Earnings per share are an important measure of

profitability.

Earnings per share = profit after tax/weighted average number of equity shares

Analysis of Profitability Ratios:

Year 2011 Year 2010

Profit margin 21.52 18.86


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Assets turn over 0.45 0.44

Return on assets 9.86 8.74

Earnings per share 71.58 56.37

In profit margin, the ratio shows that profit margin increase from 18.86 per cent in

year 2010 to 21.52 per cent in year 2011.

In assets turnover, in year 2011 Tata steel had sales about Rs.0.45 per rupees of

investment in assets as compare to about Rs. 0.44 in year 2010. We can see that there

is very little increase only 0.01 paise in sale per rupee of investment.

In return on asset, Tata steels return on assets increased to 9.86 per cent in 2011 to

8.74 per cent in 2010. This indicate that a significant improvement in overall

profitability of the company.

In earning per share, Tata steels earning per share increased from 71.58 per cent in

2011 to 56.37 percent in 2010. We can see that a high increase of 15.21 per cent per

share investment. This indicates that a significance improvement in overall

profitability of the company.

Liquidity Ratio

Liquidity is the ability of a business to meet its short term obligations when they fall

in due. An enterprise should have enough cash and other current assets which can be

converted in to cash so that it can pay its suppliers and lenders on time.

Current ratio Quick ratio Debtor turnover Inventory turnover


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Current Ratio:This is the current asset of current liabilities. It is widely used

indicator of a companys abilities to pay its debt in short term. It shows the amount of

current assets a company has per rupee of current liabilities.

Year 2011 Year 2010

Current assets 4,894.55 4012.88

Current liabilities 10,388.04 8,699.34

Current ratio = current assets/ current liabilities

= 4,894.55/10,388.04

= 0.47 (2011)

=4012.88/8699.34

=0.46 (2010)

Quick Ratio: All current assets are not equally liquid. While cash is readily

available to make payments to suppliers and debtor can be quickly converted in to

cash.

Year 2011 Year 2010

Quick assets 940.79 935.13

Current liabilities 10,388.04 8,699.34

Quick ratio = quick assets/ current liabilities

=940.79/10388.04

=0.09 (2011)

=935.13/8699.34


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=0.10 (2010)

Debtor Turnover Ratio:The debtor turnover ratio measure the efficacy of a

firms credit and collection policy and show the number of times each year the debtors

turn in to cash. It provides some indication of the quality of a firms debtors and

collection effort. High debt turnover indicates that debtors are being converted rapidly

in to cash and the quality of the companys portfolio of debtors is good.

Year 2011 Year 2010

Sales 31,901.94 26,757.80

Average debtor 431.43 535.405

Debtor turnover ratio = sales/ average debtor

=31901.94/431.43

=73.94 (year 2011)

=26.757.80/535.405

=49.97 (year 2010)

Inventory Turnover Ratio: This ratio shows the number of times a companys

inventory is turned in to sales. Investment in inventory represents idle case. The lesser

the inventory, the greater the case available for operating needs. Beside, lean fast

moving inventory run a lower risk of obsolescence and reduced interest and storage

charges. High inventory turnover is a sigh of efficient inventory management

Inventory turnover ratio = cost of goods sold/ average inventories

Analysis of liquidity ratios:

Year 2011 Year 2010


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Current ratio 0.47 0.46

Quick ratio 0.09 0.10

Debtor turnover 73.94 49.97

Inventory turnover 9.85 10.90

Analysis of Report:

They have shown profit after tax and market capitalization in graphical form that we

can easily note their profit after tax.

Mainly

Employees Creditors Security Analyst Managers and Government

will be interested in it because it provides figures of profit by which-

Employees can demand their income, and can get various information about

Provident Fund scheme of the company , Earnings Per Share of the company, Gratuity, Compensated Absence Scheme of the company, Superannuation plan, and other useful information


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Which are of their interests. There is also employee stock option plan is given on the

annual report which can be great help to employees.

Creditors can see the market capitalization of the company through which creditors

can know the stability of the company.

This page can be used bySecurity Analyst for assisting their clients to take decision

whether to invest or not in the companys shares.

Managers can use information for formulating major plan and policies and to know

how the profit is calculated so that they can calculate their commission accordingly.

For determining taxation policies on basis of national income, of which, profit of Tata

is part, Government will be interested in financial highlights of the company.

Fa Report Neha

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