Summer Internship Project Report On

Working Capital Management

TATA STEEL

Submitted in Partial Fulfilment of the requirement of Under

Graduate in Management 2021-24

Under the Guidance of

(Industry mentor) (Faculty mentor)
CA Neeru Saggu
Sr. Manager Accounts (Tubes)

Submitted by
Md Farid Rashid
2141303119

BBA, BATCH: 2021-24

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 Certificate of Approval

The following Summer Project Report titled "Analysis of Working Capital Management of
Tata Steel" is hereby approved as a certified study in management carried out and presented
in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Under
graduate in Management for which it has been submitted. It is understood that by this
approval the undersigned do not necessarily endorse or approve any statement made, opinion
expressed, or conclusion drawn therein but approve the Summer Project Report only for the
purpose it is submitted.
“Summer Project Report Examination Committee for evaluation of Summer Project Report”
Name Signature
1. Faculty Examiner _______________________
___________________
2. PMC Summer Project Co-coordinator _______________
___________________

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 DECLARATION

I hereby declare that this project entitled “Analysis of working capital Management” with
Tata Steel has been completed by me & enclosed report is my original work. This report is
being submitted for fulfilling the requirement of Under Graduate in Management as Summer
Training Project, at Siksha O Anusandhan,Bbsr.
I Also confirm That wherever I have used text or data from any other source I have duly
acknowledged the same. Also, the report is a true reflection of actual work done by me during
summer Internship program.

(Signature)
Md Farid Rashid
2141303119
Place: Bhubaneswar

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 Executive Summary
The primary function of working capital management is that they look after to maintain the
proper cash flow to meet there day to day operating cost and short term debts, a working
capital can be calculated by subtracting current asset by current liabilities, in short we can say
that working capital management purpose is to monitor cash flow, current assets and current
liabilities of a company through the ratio analysis like, collection ratio, Inventory turnover
ratio and working capital ratio. Through the ratio analysis company can improve their
profitability and earning.
Tata Steel Limited, earlier it was known as (TISCO) Tata Iron and Steel company Limited, It
is an Indian Global steel-production organization, which headquarter is in Kolkata, West
Bengal, India, It is the 2nd biggest steel organization in India with a yearly limit of 13 million
tons after sail, Tata Steel works in 26 nations with key activities in India, Netherlands and
United kingdom and utilizes around 80500 employees, Their biggest plant which has the
capacity of 10 Metric ton per annum, it situated in Jamshedpur, Jharkhand.
This is ana attempt to know how the theories can be applied to practical situation, as a student
of post graduate diploma in management of Jaipuria Institute of Management (Noida) It is a
part of the study for everyone to undergo summer internship project for 2 months. So for this
purpose, I got the opportunity of summer internship at Tata Steel Limited and the topic for
the project is “Working capital Management of TATA Steel for the year 2020 and 2021”.
Scope Of Study.
In this internship my roles and responsibilities as an intern was to analyze the elements of
working capital, The study of working capital of Tata Steel was limited to 7 weeks only, thus
I have reviewed the annual report of company for the year 2020-21, and I have gone through
company’s balance sheet and statement of profit and loss account.
Objective of Study.
 To analyze working capital and liquidity position of Tata Steel.
 To determine the effective operating cycle of tata steel.
 To render few recommendations to maintain effective working capital.
Methodology Adopted
Research Methodology is a way to solve systematically the research problem. It may be
termed as science of studying how research has been made.
Time Period

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The time bound for this analysis was limited to 7 weeks only.
Research Design
Descriptive research is used to study the working capital of firm. Recent situation of the
company regarding working capital is generally described.
Data Used.
Only Secondary data is used to conduct this study.
Data are referred from the below given points,
1. Balance sheet
2. Profit and loss Account
3. Profit sheet of the company
4. Industry Mentor
Tools Used
Various tools which are used to analyze the working capital are:
 Ratio Analysis.
 Schedule for change in working capital.
 Operating cycle.

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 Acknowledgement

“It gives me immense pleasure to express my sincere gratitude to industry mentor CA

Neeru Saggu, who guided me in the completion of this project. I’m greatly indebted to
both for providing me valuable guidance at all stages of study. Their advice, constructive
suggestions, positive and supportive attitude, and continuous encouragement helped me
completed this assignment in timely manner. It was a great learning experience for me to
work on this project”.”
“As a student of Siksha O Anusandhan, BBSR, I would like to express my thankfulness
to the institute for helping me become a management professional by shaping my learning
curves. The program is an open door as a major achievement in my vocation
improvement.”
“I will endeavour to apply acquired abilities and information in the ideal way and deal
with its improvement to accomplish professional goals.”

Thanking you
Md Farid Rashid
2141303119

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 Table of content

S. No Topic Page No
1.1 Introduction to working capital 11
1.2 Concept 11-12
1.3 Need for Working capital 12-13
1.4 Composition 13
1.5 Temporary v/s Permanent capital 13
1.6 Working capital cycle 13-15
2.1 Sector Analysis 17-18
2.2 Porter’s forces model 18
2.3 Market size 18
2.4 Revenue and capacity of the top companies 18-19
2.5 Challenges of steel sector 19
2.6 Government Initiatives for steel industry 19-20
2.7 Contribution to economy 20
2.8 Some key technological advancements in the steel 20
sector
2.9 Future & prospects post covid – 19 on steel sector 20-21
3.1 Company analysis (about the company) 23-24
3.2 Company profiles 24-25
3.3 Key Financial parameters 25
3.4 Key financial ratios 25-31
3.5 Major competitors 32-33
3.6 SWOT analysis 33
3.7 CSR policy of Tata steel 33-34
3.8 Merger & Acquisition 34
3.9 Impact of covid- 19 on Tata steel 35
4.1 Visualisation of the project 37
4.2.1 Raw material conversion period 38-39
4.2.3 Work in progress conversion period 39

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 4.2.4 Finished goods conversion period 39-40
4.2.5 Debtors’ collection periods 40
4.2.6 Creditor payment periods 41
4.3 Operating cycle 41-42
5.1 Learning & outcomes 45
5.2 Suggestion 45
5.3 Conclusion 45
5.4 References 46

List of Figures
S. No Figures Page No.

1 Working capital 11

2 Temporary v/s permanent working capital 13

3 Working capital cycle 14

4 Production of Indian steel industry 17

5 Import of total finished steel in India 18

6 Export of total finished steel in India 18

7 Revenue of top steel companies 19

8 Current ratio 26

9 Quick ratio 27

10 Inventory turnover ratio 28

11 Receivable turnover ratio 29

12 Payable turnover ratio 30

13 Tata steel share price 32

14 CSR policy of Tata steel 34

15 Networking capital 38

16 Raw material conversion period 39

17 Work in progress conversion period 40

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18 Finished goods conversion period 40

19 Debtors’ collection period 41

20 Creditor payment period 42

21 Operating cycle 43

Chapter 1:
Introduction

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1.1Working Capital:

Apart from working capital it is also called rotating, circling or momentary capital. Every
organisation or business requires the assets for its initial start, or the foundation is called fixed
capital and expect the asset which is involve in day to day’s activities like acquisition of
crude material, instalment of wages and so on which is called working capital of the firm. In
such ways the capital which is required to fund the current assets are working capital like
money, securities, debtors, stocks etc
However, in general sense we can termed working capital as amount which business requires
to carry its day-to-day operations and such amount indicates both in assets and liabilities.
When we talk about management of working capital, we generally speak excess of current
assets over its current liabilities. The assets put assets into current assets are named as
working capital. The store is expected to run the everyday tasks. It courses in the systematic
the blood flows in a living body. For the most part, working capital alludes to the present
assets of an organization that are changed starting with one structure then onto the next in the
normal course of business, for example from money to stock, stock to work in progress
(WIP), WIP to completed products, completed merchandise to receivables and from
receivables to money.
For instance , in manufacturing concern like TATA STEEL accessibility of crude material is
significant for nonstop and relentless creation, certain measure of completed merchandise in
the distribution centre are additionally significant for an organization to proceed with its deals
without influencing by changes in the creation rate, moreover the organization likewise needs
to put assets into credit deals for accomplishing persistent deals alongside cash in hand and
bank balance to maintain the day by day money need.

1.2 Concept.

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FIG 1- Working Capital

In normal terms, working capital alludes to gross working capital. It is additionally

characterized as monetary idea as well as it is also connected with the going concern concept.
It contents the capital put assets into the present assets of the firm. Current assets, normally
means that the benefits which can be easily and effectively converted into the liquid state
within the period of 1 financial year, it helps in deciding the arrival on interest in working
capital and giving right measure of working capital at opportunity time.
Now if talk about the net working capital of the organisation then basically it says the
difference the company current asset and current liabilities from there balance sheet. In
simple terms it calculates the company liquidity and their ability to meet the short-term
grievances, and they also fund their operations of their business, and if you ask about what
the ideal situation for the net working capital there is then yes ideal situation for it, a
company should have more current assets than their current liabilities, which will reflect the
positive working capital balance.
Formula for calculating the net working capital = Current asset – Current Liabilities.

Well after going through the formula of net working capital we easily witness the net increase
or decrease in the working capital by comparing it with the different industries, Net working
capital can be negative as well as positive both, it depends on the situation, when short term
assets are more than the short term liabilities then working capital is said to be positive and
situation is reverse order like when current assets is less than the short term liabilities then it
is said to be as negative working capital
1.3 Need for Working Capital

As we have discussed the working capital concept, we can say that it has ultimate importance
for every business. There are many other benefits which possess the need for adequate
working capital which are:

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  No Interruption in Production: In order to keep every situation in smooth
progression, it is very important to keep a proper balance of working capital, which
help the organisation in paying the day to day’s activity, recruiting work and other
different working cost.
 Improves Goodwill: A firm with sound working capital position can make opportune
instalment of its remarkable bills. This improves the notoriety of the firm.
 Loan Availability: A organisation who is having an excellent working capital and
has positive view in the market in terms of there working capital management, this
creates as sound credit value for the organisation, due to which its get easier for the
firm to take extra loan by the positive terms and conditions to full fill there need of
the fund or to expand there working capital.
 Productive Use of Fixed Assets: Sufficient measure of working capital empowers
the firm to utilize its fixed assets more productively and widely. If the fixed assets
stay inert because of scarcity of working capital, devaluation of fixed assets and
enthusiasm on obtained capital put assets into fixed assets should be brought about
superfluously.
 Uncertainties: It can meet unexpected possibilities of the firm. Unanticipated
possibilities like business wretchedness, money related emergency because of
immense misfortunes and so forth can without much of a stretch be survived, if
sufficient working capital is kept up by a firm.
 Facilitates Dividend: Satisfactory working capital guarantees dividend to the
investors. If there exist inadequacy in working capital requirements, then firm often
resorts to more and more retained earnings.
1.4 Composition
Working capital generally includes.
 Current Asset - It refers to all those assets which are held by the business for short
period of time i.e., generally for an accounting year. Held for short period of time
generally means that they got converted into cash. Some examples of current assets
are:
 TRADE RECEIVABLES
 SUNDRY DEBTORS
 INVENTORY
 PREPAID EXPENSES
 CASH AND BANK BALANCE
 SHORT TERM INVESTMENT

 Current Liabilities - It refers to business obligation which are generally met within a
short period of time i.e., in between one accounting year. Common examples of
current liabilities are:
 CREDITORS
 SHORT TERM LOAN
 PROVISION
 OUTSTANDING EXPENSES ETC.
1.5 Temporary v/s Permanent working capital

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 FIG 2 – Temporary v/s Permanent working capital

 Permanent capital: It refers to minimum amount of working capital which is needed

by the company to carry out their day-to-day activities, It does not fluctuate with
operational level as it serves vital element to sustain viability of the business.
 Temporary capital: It refers to such amount of working capital which varies or
fluctuates with seasons or needs. It always remains above permanent capital as
depicted in the above diagram. It varies with operational level of business.

1.6 Working Capital Cycle

Every organisation or company has working capital cycle, in simple term working capital
cycle says about the time a particular business takes to turn its current assets into available
cash, if the working capital is longer then its means that business will take more time to get
there good cash flow, A working capital cycle can be maintain in a good condition by selling
their inventory quicker, collecting the payment in less time or by taking time in paying the
bills. As such, Time length of working capital cycle is calculated in terms of days, which the
duration between the purchasing of the merchandise to fabricating of the items which also
includes the age of the money income on selling the items, for example if the organisation
working capital cycle is shorter then it indicates that organisation can lose their money stuck
in working capital management in short span of time, and if the working capital cycle is bit
long then at that point of time capital gets secure in the operating cycle, thus a organisation
who tries to shorten their working capital cycle is said to be good, they do so to improve the
liquidity position of the organisation and to increase their proficiency.

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Fig 3 – Working capital cycle

For Example:
 First, business purchase raw material etc. from its supplier on credit basis say 50-day
time.
 Next it converts purchased material into finished products and sold to the customer on
credit again for 27 days.
 27 days after the selling, business receive cash and here working capital cycle got
completed.
DAYS SALES
OUTSTANDINNG 27 days

DAYS PAYMET
OUTSTANDING 50 days

DAYS INVENTORY
OUTSTANDING 72 days

Formula:
WCC = Inventory Days + Receivables Days – Payable Days.

There are 3 main steps in the cycle:

1. Payment for the assets
2. Selling inventory
3. Receiving payment for the inventory which have been sold.

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How working capital cycle gets affected?
Well, the factors which affects the working capital cycle is different for the different
industries, but it is important to know that what amount of time it takes you to sell your
inventory and what amount of time it takes before you receive the payment, this impacts the
length of the working capital cycle for a business.

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 Chapter 2
Industry Analysis

2.1 Industry Analysis

Global trends of Steel Sector
In the year 2019, world’s steel production was touched to the level of 1869 million metric
tonnes, due to this it showed the growth of 3% from 2018, and if we talk about the China then
they remained in 1st position as a crude steel producer in the year 2019, with the production of
996 metric tonne, and on 2nd position it was India with the production of 111 metric tonne,
and on the 3rd position it was Japan with the production of 99 metric tonne, and this data was
released by the world steel association.

Domestic Scenario of Steel Sector.

If we talk about the Indian market then India is the 2 nd largest producer of steel in the world,
In the year 2019 we produced 111.2 million Metric Tonne, the main reason for the
improvement of the Steel sector in Indian economy is because of the availability of the raw
material like iron ore, and secondly, in India labour cost is less, In India, Consequently Steel

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sector is the major contributor to India Manufacturing Output. In the year 2019 India was the
largest producer of sponge iron and we are the 2 nd largest finished steel consumer after China
& USA, the data is according to the World steel association. Government has played a major
role by releasing the National steel policy in the year 2017, this has helped this sector in
Laying down the roadmap for the long-term growth, this policy also gives importance to
domestically manufactured Iron & Steel products.
The Indian Steel Industry is at the Modern, we have also tried to continue with modernization
of the old plants, and we always Loom for the Upgradation of the higher energy efficiency,
India Industry is divided into 3 categories which is major, main and secondary producer,
Indian steel industry has developing at a constant speed, after the de- regulation, they are
riding high on the resurgent economy because the demand for the steel is also rising.
Now if we talk about the production of Indian steel industry, Steel industry was de- licensed
in the year 1992 and now in the 2019 we are 2 nd biggest producer of crude steel in the world,
in the year 2019-20 we have produced total finished steel which contains alloy and non-alloy
(102.62 million tonne), and if we talk about the pig iron, then in the year 2019-20 we
produced 5.42 million tonne, it was a decline 15.5% from the last year, and if we talk about
the sponge iron then India was largest producer of sponge iron , and there production was of
37.10 Million Tonne in the year 2019-2020.
Indian Steel Industry: Production in (Million Tonnes)
Category 2015-16 2016-17 2017-18 2018-19 2019-20
Pig Iron 10.24 10.34 5.73 6.41 5.42
Sponge Iron 22.43 28.76 30.51 34.71 37.1
Total 106.60 120.14 126.85 101.29 102.62
Finished
Steel
Source: - Joint plant committee (FIG -4)

Indian Steel Industry: Import of total finished steel (In million Tonnes)
Category 2015-16 2016-17 2017-18 2018-19 2019-20
Quantity 11.71 7.23 7.48 7.83 6.77
Source: - Joint plant committee (Fig – 5)

Indian Steel Industry: Export of total finished steel (in million tonnes)
Category 2015-16 2016-17 2017-18 2018-19 2019-20
Quantity 4.08 8.24 9.62 6.36 8.36
Source: Joint Plant committee (Fig -6)

2.2 Porter’s forces model

 Threat of new entrants – In this industry threat of the new entrant is low because,
this industry is capital intensive industry and it requires huge amount (Rs 25 billion-
Rs 30 billion) to set up steel plant, and it also depend on the area of the plant and
technology used in the plant.
 Threat of substitutes – In this industry threats of the substitute is low, in this sector
majorly there is no substitute of the steel, though there is increase in the consumption

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 of the aluminium in the recent years, but it doesn’t create a thought full situation for
the steel, aluminium cannot replace the steel and their cost is also different.
 Bargaining Power of the suppliers – The bargaining power of the suppliers in this
sector is medium – high, because here majorly the steel plants have their own mines,
through which they get their raw material like iron ore and coal, one of its examples is
Tata Steel, but those plants who are non-integrated or semi-integrated depends on the
suppliers, for example SAIL.
 Bargaining power of buyers – There are some buyers like automobile, shipping
company, oil & gas and consumer durables who enjoys high bargaining power
because of their bulk order, while some small consumers have low bargaining powers,
and they don’t enjoy the benefits.
 Intensity of rivalry – In this sector rivalry is high because steel industry has there
competition globally, giant steel producing countries like China gives tough
competition by exporting the product in genuine prices, and as we know that branding
is not important in this, because it is very difficult to differentiate the steel product of
different companies.

2.3 Market Size

Consumption of finished steel has grown up by 5.2% during the year 2016-2020 and has
reached more than 100 million tonne, for example India’s crude Steel and finished steel
production, which has grown to 108.5 million tonne and 101.03 million tonne respectively in
the year 2020, and if we talk about the current performance then in between 2020 and 2021
India has produced the finished steel at the rate of 76.04 million tonne and for the crude steel
they have produced at 93.1 million tonne. Export and import of the finished steel in the year
was 8.24million tonne and 6.69 million tonne in the year 2020 and in the till February 2021
the export and import of finished steel was 9.49 million tonne and 4.25 million tonne.
2.4 Revenue and capacity of the top companies.

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COMPANY NAME TOTAL SALES TOTAL CAPACITY

TATA STEEL LTD Rs 1,60,769 Cr. 34 Mn TPA

JSW STEEL LTD Rs 84,050 Cr. 18 Mn TPA

STEEL AUTHORITY OF Rs 57,496 Cr. 21 Mn TPA

INDIA LTD (SAIL)
JINDAL STEEL AND Rs 39,652 Cr. 11 Mn TPA
POWER LTD
RASHTRIYA ISPAT Rs.20844 cr. 7.3 Mn TPA
NIGAM LTD (RINL)
ELECTROSTEEL STEEL Rs.43113 Cr. 7.3 Mn TPA
LTD
Fig 7 – Revenue of top steel companies

2.5 Challenges of steel sector

 Solid waste management – As because during the process of steel manufacturing it
emits large amount of solid waste like bolder, but here in most of time steel
manufacturer ignore the waste, but that solid waste also has the valuable particles
which can be reused to manufacture different products.
 Growth in Demand – They are focusing more on the development and infrastructure
parts thus, in the global scenario it is expected to witness the rise in the coming years,
most of their demand will full fill by the primary raw materials, thus in coming years,
the increase in the urbanization in this market and renewal of infrastructure in the
developed market shows that we will witness a growth in the steel consumption.
 Price Volatility of raw materials – The regular changes in the price of the raw
material and irregular steel prices have put a huge pressure on the steel margins,
though steel manufacturer is working hard to stand still in the competitive market,
many of the steel manufacturer are investing their money into research and
development for making their products different from the other players of the market.

2.6 Government Initiatives for steel Industry

 In the Union budget of 2020-21, the government has allocated Rs39.25 Crore to the
ministry of steel.
 Government of India has collaborated with the different ministry such as economy,
trade and industry and they have also signed a memorandum of cooperation with the
government of Japan in January 2021 for the purpose of boosting the steel sector.
 Ministry of steel has prepared the framework policy in the month of September 2020,
which will help in boosting the steel sector in India.

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  In the month of October, the directorate general of the foreign trade has announced
that steel manufacturer of the country can avail benefits of drawbacks on the steel
parts which was supplied by their distributors, dealer and service centres.
 On iron ore 30% of export duty was levied to assure the supply to steel industry in
India.
2.7 Contribution to Economy
We are the 2nd largest manufacturer of steel in the world, In India it has a huge scope for
developing there mining reserve of iron ore. The overall contribution of Indian steel sector in
the country’s gross domestic product is above 2%, This data is of 2018, the total market of
steel in India is of Rs3.13 Lakh crore. It was reported that during the month of April-
December of 2017 crude steel production has grown up by 4.6% with 75.49 million tonne,
and Indian finished steel exports has rose with 8.24 million tonnes, while we have also
witnessed the downfall of import by 36.6 %, Finished steel export rose to 52.9 % during the
month of April-december2017, and the import finished steel exports has increased to 6.096
million tonnes, and during the month of April- December 2017 consumption of the finished
steel has grown up by 5.2 %, this data is according to the department of industrial policy and
promotion.
2.8 Some key technological advancements in the steel sector
 The ORC Technology –During the process of Rankine cycle its thermodynamically
heat changes and their function depends on the water which gives almost 84% of the
power generation, there organic Rankine cycle has the same operating prinnciples as
the Rankine cycle, but Organic Rankine cycle actually dependant on a turbo generator
which transform the heat energy into the mechanical energy first and electrical energy
at the end, the only change in this type of energy is that instead of creating the steam
from water, organic Rankine cycle technology steamed a natural liquid, due to which
it slower down the turbine and at the end it reduces the pressure.
 HYBRIT Process –The full form of the HYBRIT is (Hydrogen Breakthrough
Ironmaking Technology), and it is a combine task of three Swedish companies, which
is SSAB, LKAB, and Vattenfall, the main goal of this project is to create zero carbon
in steel production which will begin from the 2020, thus HYBRIT process come
under the advancements which are the usage of hydrogen as lower agent, and in this
hydrogen is produce by the electronic which depends on the green power.
 Jet Process- It is formalized to gain the benefits of chemical energy of coal it is more
efficient and cost effective in the process of Transformation. In this way without
external energy scrap metal is higher, also high adaptability of the system makes it
easy for the implementation, and the scrap rates are from 1 to 100% which is
imaginable for the process of adaptability.
 Molten Oxide Electrolysis – it is an unconventional electrometallurgical system
which is permissible for the sudden production of steel in the liquid state from oxide
raw material, and it also assure you for the easiest simplification for the whole
procedure and energy reduction, apart from this molten oxide electrolysis is being is
considered for the utilization of anode material which are generally graphite, and this
is generally used for the ferro- alloys and iridium which is mostly used with the iron.

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2.9 Future and prospects post covid -19 on steel sector
As we all know that how covid-19 has disrupted it globally, this new normal is taking time to
emerge as because we witnessed a realignment of powers of the different domains, The
Chinese virus has impacted the supply chain, especially for those material on which we are
totally dependent on China, product which are related to the steel.
In most the of the industries , operation were closed for month, and steel demand for the
nation in the year 2020-21 has fallen by 15%, and if we see this scenario through the
spectacles of economy then we can see that this situation will lead oversupply, and at the end
it will lead to reduction in the price, these inventories will contains the intermediate or semi
steel items which is used by the downstream players, and currently it is closed due to the
lockdown in the different states, thus it will lead to the reduction in the price until and unless
demand doesn’t uprise in the future, and according to the steel association even if the
lockdown is lifted , steel industries will face some labour challenges and logistics challenges
because of the increase in the fuel prices.

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 Chapter 3
Company Analysis

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3.1 Company Analysis

About TATA Steel

FOUNDER JAMSETJI TATA

SECTOR IRON & STEEL

YEAR OF ESTABLISHMENT 26 AUGUST 1907

CEO & MD T.V. NARENDRAN

HEADQUARTER MUMBAI, MAHARASHTRA

BRANCHES WORLDWIDE

NSE LISTED YES

BSE LISTED YES

EPS 117.04 (2021)

PROFIT AFTER TAX 13,606.62

Now, if we talk about the Tata steel, then is India’s multinational steel making giant
company, which 1st plant was set up in the small town of Jharkhand, which is Jamshedpur and
it’s headquartered is based on Mumbai of Maharashtra, Tata is a wide Umbrella which
majorly group almost every sector, and Tata Steel is the subsidiary of Tata group, earlier it
was popularly known as TISCO in Jamshedpur, it was founded by the Mr Jamshedji
Nusserwanji Tata and was established by the Dorabji Tata in the year 1907, earlier they
started their production with the Pig Iron in the year 1911, and after that they started
producing steel in the year 1912, During the period of the 1 st world war which was during the
year 1914-1918 they were doing great progress, and by the year 1939 they were operating the
largest steel plant in the British empire, Tata steel launched there major modernization and
expansion program in the year 1951 and by the year 1958there program were upgraded to 2
million metric tonnes per annum, year by year they witnessed the growth in there
organisation and by the year 1970, in the Jamshedpur plant almost 40000 people were
employed and further 20000 people were employed in the coal mines, It is one of the top steel
manufacturing companies in the world, which has the capacity to produce 34 million tonne

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crude steel per annum, also it is world’s most geographically diversified steel producer, it has
their financial presence in more than 50 countries.
VISION
TATA steel aspires to be the global steel industry benchmark for value creation and corporate
citizenship.

MISSION
Consistent with the vision and values of the founder Jamshedji Tata, TATA Steel strives to
strengthen India’s industrial base through effective utilization of staff and materials. The
means envisaged to achieve this are best technology and high productivity, consistent with
modern management practices.
TATA Steel recognizes that while honesty and integrity are 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 it does in an atmosphere free from
fear, and thereby reaffirms its faith in democratic values.
Core Values
1.Integrity
2.Unity
3.Responsibility
4.Excellence
5.Pioneering
3.2 Company profile in India - Now, if we talk about the Tata steel, then is India’s
multinational steel making giant company, which 1st plant was set up in the small town of
Jharkhand, which is Jamshedpur and it’s headquartered is based on Mumbai of Maharashtra,
Tata is a wide Umbrella which majorly group almost every sector, and Tata Steel is the
subsidiary of Tata group, earlier it was popularly known as TISCO in Jamshedpur, it was
founded by the Mr Jamshedji Nusserwanji Tata and was established by the Dorabji Tata in
the year 1907, earlier they started their production with the Pig Iron in the year 1911, and
after that they started producing steel in the year 1912, During the period of the 1st world war
which was during the year 1914-1918 they were doing great progress, and by the year 1939
they were operating the largest steel plant in the British empire, Tata steel launched there
major modernization and expansion program in the year 1951 and by the year 1958there
program were upgraded to 2 million metric tonnes per annum, year by year they witnessed
the growth in there organisation and by the year 1970, in the Jamshedpur plant almost 40000
people were employed and further 20000 people were employed in the coal mines, It is one
of the top steel manufacturing companies in the world, which has the capacity to produce 34
million tonne crude steel per annum, also it is world’s most geographically diversified steel
producer, it has their financial presence in more than 50 countries, and recently they have set

26 | P a g e
up a plant in the eastern side of the state Odisha which has started their first phase of 8
million of steel capacity in the year 2016.
Company profile in Southeast Asia – Operation of Tata Steel operation in south east Asia
has begun in the year 2004, and then they have acquired of Nat steel, Singapore, and there
operation are majorly run by the Nat steel holding PVT ltd, it is fully owned subsidiary of the
Tata steel, and in the year 2016 they have also purchased there majority of stake in the
Thailand based steel maker millennium steel, which has impowered there south east Asian
operation, they are also working effectively to improve their value added products and there
portfolio, and no they are working on their key steel operation in Singapore, Thailand and
China for the improvement.
Company profile in Europe - With the production capacity of 12.1 million tonne per annum
Tata steel is the 2nd largest steel produce in Europe. They have become more famous in steel
industry market after acquiring the Europe steel giant Corus in the year 2007. In Europe
manufacturing facilities consist of hubs like strips products mainland Europe, strips products
UK & integrated business (plating and cogent power), They have two integrated (blast
furnace-based) steel making sties which is in Ijmuiden, Netherlands, and port talbot, South
Wales, respectively.
3.3 Key Financial Parameters
Market Capitalization – Now if we talk about the market capitalization, then it shows the
average valuation of the organization which is totally based on the share price and the total
number of outstanding stocks, it has the formula to calculate the market capitalization, which
is done by the multiplying the current market price of the company’s share with total
outstanding share the of the organisation. Thus, market capitalization of Tata steel is Rs
1129.55 Crore.
3.4 Key Financial Ratios
Liquidity Ratio- Basically liquidity ratio says about the company’s ability to pay there
short term obligation, everyone need to look for the liquidity ratio, for example the people
who want to invest in a particular company or they are the investor of the company, they
always want the liquidity ratio of their companies to be above then 1, a company who is
having the liquidity ratio has more chance of being approved for the credit, in short we
can say that liquidity ratios says the company’s ability to cover short term obligation and
cashflow which measures the debtor ability to pay their current debt. There main liquidity
ratio is current ratio and quick ratio and days sales outstanding.
Current ratio – Current ratio of the companies compares between the current asset of the
company to its current liabilities. This ratio basically helps the investor to understand
about the company’s ability to pay their short debt with their current asset, it also talks
about the current asset which liquid in nature, or it can be turn into cash within the time
span of 1 year.
Current ratio = Current Assets/Current Liability
YEAR CURRENT CURRENT CURRENT
ASSETS

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YEAR QUICK ASSETS CURRENT QUICK RATIO
LIABLITIES

2020 9,292.53 30,871.30 0.30

2021 15,152.51 29,313.32 0.52

LIABILITIES RATIO

2021 20,009.19 30,871.30 0.65

2020 23,756.30 29,313.32 0.81

As per standalone balance sheet of year ended 31 March 2021.

Current Ratio
0.9
0.81
0.8
0.7 0.65
0.6
0.5
0.4
0.3
0.2
0.1
0
1 2
FIG 8 – Current Ratio
Analysis
As per the above table, we can see that current ratio is increasing from 0.65 in 2020 to
0.81 in 2021 which means that company is in good state with respect to converting
their liability into asset in any situation.
Quick Ratio – Quick ratio says about the ability of the company by measuring the
company’s ability to pay its current liabilities without selling their inventory in order
to gain the finance, it is assumed as more conservative than current ratio because it
contains current assets which will cover the current liabilities. If the quick ratio is
higher than it means that company’s liquidity Position is strong.
QUICK RATIO = QUICK ASSETS / CURRENT LIABILTY
Quick assets = current assets – inventory – prepaid expense
Quick assets of Tata Steel (2020) = 20,009.19 - 10,716.66 – 0== 9,292.53
Quick assets of Tata Steel (2021) = 23,756.30 – 8,603.79 – 0=15,152.

As per standalone balance sheet of year ended 31 March 2021.

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 Quick Ratio
0.6
0.52
0.5

0.4
0.3
0.3

0.2

0.1

0
1 2

FIG 9 – Quick Ratio

Analysis
As we know the standard quick ratio is 1:1. But quick ratio of company is less than standard
quick ratio in both the years. As we can see that the quick ratio has increase in the case of
Tata steel from 0.30 in 2020 to 0.52 in 2021, we can say that company has increased their
liquid assets and been able to pay back the liability.
Inventory Turnover Ratio
Inventory turnover ratio basically says about the company that how many times a company
can turn their inventory into sales, or how many times a company can replace there the
inventories that is has sold, a low inventory turnover ratio says that company is having weak
sales, and which may lead to more stocks, and on the other hand high ratio reflects that
company is having strong sales.
Inventory turnover ratio= Net Sales / Average Inventory
YEAR NET SALES INVENTORY ITR (times)

2020 64,869.00 10,716.66 6.05

2021 58,815.57 8,603.79 6.84

As per financials of tata steel year ended 31 March 2019.

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 Inventory Turnover Ratio
7
6.84
6.8

6.6

6.4

6.2
6.05
6

5.8

5.6
1 2

Fig 10 – Inventory Turnover Ratio

Analysis
Inventory turnover ratio of the company has increased from 6.05 in 2020 to 6.84 in 2021
which indicates that company is able to manage and sell their inventory efficiently.
Receivable Turnover Ratio
Receivable turnover ratio is a accounting measure, which measure the company effectiveness
in collecting there money or receivable by the customers, A high receivable turnover ratio
indicates that company is collecting there money efficiently, and low receivable turnover
ratio means company is not collecting there cash efficiently.
Receivable turnover ratio = Net sales / Account receivables
YEAR NET SALES ACCOUNT RTR
RECEIVABLES
2020 58,815.57 1,016.73 57.85

2021 63,743.40 3,863.31 16.5

As per financials of tata steel year ended 31 March 2019.

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 Receivable Turnover Ratio
70

60 57.85

50

40

30

20 16.5

10

0
1 2

Fig 11 – Receivable Turnover Ratio

Analysis
Receivables turnover ratio has drastically decreased from 57.85 in 2020 to 16.5 in 2021,
which genuinely reflects that company is inefficient in managing their debtor. Company
needs to reassess its current management procedures to ensure faster collection of debts.
Payables Turnover Ratio
Payable turnover ratio is a short-term liquidity measurement where company measure that at
how much rate they are able to pay off their suppliers, in short, we can say that account
payable turnover shows that how many time a company can pay off there payable in the
given period, this shows a relation between the net/average credit purchases and average
creditors.
Payables turnover ratio = Cost of goods sold / Account payables.
YEAR COGS ACCOUNT PTR
PAYABLES
2020 52,204.59 10,600.96 4.92

2021 45,948.27 10,638.59 4.32

As per financials of tata steel year ended 31 March 2019.

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 Payable Turnover Ratio
5
4.92
4.9
4.8
4.7
4.6
4.5
4.4
4.32
4.3
4.2
4.1
4
1 2

Fig 12 – Payable Turnover Ratio

Analysis
Payable turnover ratio reflects the ability of the organization that whether they can avail
credit facility from there supplier throughout the year or not. Lower ratio indicates more time
to make the payments. Ratio in both the year of the company is considered good and there are
no significant changes in ratio of both years. Firm is enjoying accepted credit facilities from
its suppliers.
Product & Service
Product segment
1.Agriculture
2.Automotive steels
3.Construction
4.Consumer goods
5.Energy and power
6.Engineering
Key Product
1.Hot Rolled
2.Cold Rolled
3.Coated Coil
4.Tubes
5.Rebar
6.Wire Rods

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33 | P a g e
 MARKET SHARE (cr.)
S. NO. COMPETITORS

2020 2019 2018 2017 2016

1 JINDAL STEEL & POWER 8,384.40 17,378.63 21,226.05 11,066.93 5,493.97

2 JSW STEEL 35,148.01 70,283.98 69,420.02 45,024.00 30,716.54

3 SAIL 9,520.88 22,180.91 28,996.32 25,278.83 17,761.29

Tata Steel Indices from 3rd June 2021 to 15th June 2021.

Fig 13 – Tata Steel Share Price

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As we can see the share price has shown some bullish nature. It has shown continuous rise in
share price after declining a bit from 1128.82 on 7th to 1101.32 on 9th June, but after that it
has shown an increase in share price and reached to 1175.40 on 15th of June.

3.6 SWOT Analysis

STRENGTHS WEAKNESS
 They work through the  Over dependence on Europe (over 50% business
technique of economies of scale. comes from Europe
 They have control on their raw  Lagging behind in the technological terms
materials  Operating efficiency is not as good as international
leaders.
 Having the trust of Tata
 Diversified product portfolio
 Adaptability in fast changing
environment
 Book value per share improving
for last 2 years.
 Operating in 26 countries,
which gives them an edge to
have a commercial presence.

OPPORTUNITY THREATS
 Increasing demand of steel in India  Intense competition
 They are growing and improving on  Decreasing global steel prices.
there manufacturing unit,  There cost may increase because of the in the
construction parts and automotive coking coal price.
industry.  In India it is very difficult to acquire large land
 They have the opportunities to without government support.
acquire the coal blocks of asia and
Africa.
 Newer technologies like direct iron
ore smelting

3.7 CSR Policy of Tata Steel for Financial year 2020-21

AMOUNT ALLOCATED
(Rs. CRORE)
S.NO NAME OF THE PROGRAMMES

Promoting Healthcare including preventive healthcare

1 through civic infrastructure & services. 39.32

Response to COVID 19 Pandemic.

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 2 107.39

Animal welfare, protection of flora and fauna and ecological

3 balance programs. 4.85

Provide safe drinking water through water projects

4 including water infrastructure and solar drinking water 8.38
facilities

Livelihood generation programs through promoting

5 agriculture and allied activities, skill development, 23.39
entrepreneurship, women empowerment, and programs
on disability.

Fig 14 – CSR policy

3.8 Merger & Acquisition.

1. NatSteel – In the year 2004, august Tata steel have decided to purchase the steel producing
company of the Singapore base company, and this whole acquisition process took almost 1
year, which was completed in the February 2005. During the time of purchase NatSteel was
having the capacity of producing finished steel of 2 million per annum.
2. Millennium Steel – In the year 2005 Tata steel has decided to acquire the Thailand based
millennium steel maker, which had the total cost of over $130 million, earlier it was known
as the millennium steel which is now renamed as Tata steel Thailand, and it is having it
headquarter in Bangkok.
3. Corus – In the year 2006, 20th October, Tata steel has decided to sign a deal with the
Anglo- Dutch company(CORUS) to acquire there 100% stake at the rate £4.3 billion, which
approximately 8.1 billion and there per share was at 455 pence, and if we talk about the
employee then Corus employed almost 47300 people in all over the world, in which 24000
people was alone in the united kingdom, During the period of purchase Corus was almost 4
time bigger than Tata Steel in terms of steel production annually, at that time Corus was the
9th largest producer of the steel in all over the world, and Tata steel was in the 56 th position as
a steel producer in the worldwide, but after the purchase this deal had made the Tata steel
world’s 5th largest producer of steel in the worldwide.
4.Steel Engineering and VINAUSTEEL – In the year 2007 through there fully owned
subsidiary , NatSteel Asia Pte Ltd decided to acquire the stake in both rolling mill companies
which were located in Vietnam in which Structure steel engineering Pte Ltd with 100% stake
and VINAUSTEEL which was having stake of 70%, thus the whole acquisition value was
$41 million, after the completion of this deal Tata steel was having 2 rolling mills a 2.5
million tonne per year bar an wire which were operated by SSE steel Ltd and 1.8 million
tonnes per year reinforcing bar which was operated by VINAUSTEEL Ltd.
5.Bhusan Steel – In the year 2018, tata steel has decided to acquire the Bhushan steel, at that
time Bhushan steel was facing insolvency, and on 26 th July 2017 insolvency proceeding were

36 | P a g e
initiated against this company under insolvency and bankruptcy code, and then Tata Steel
was the higher bidder, and then they renamed the company as Tata Steel BSL.
3.9 Impact of Covid-19 on Tata Steel
After the pandemic Sales figure of the Tata steel has decreased by 15% to 4.03 million
tonnes, because this pandemic was creating logistic problem as well as the demand for the
product was lower, people were in there homes with no sources of income, there 1 st priority
was to fill there stomach and after that they were make expense on the rest of the items, all
the construction sites were closed in the pandemic this leads to decline in the demand of the
iron rod etc from march onwards, however the production volume of Tata steel grew by 6%
to 4.74 million tonnes, during the financial year 2020 Tata steel has witnessed the full growth
In the production which was almost 8%, This was made possible by the support of Tata steel
BSL and acquisition of Usha Martin steel business by the Tata Steel long product, during this
period Tata steel BSL recorded the best ever annual sales, this numbers are provisional
because the company was yet to declare their 4th quarter figures and annual earnings figures,
and Tata steel India has registered highest ever annual sales for their branded product and if
we talk about retail segment, then they witnessed the increase of 8% in the financial year
2016, and company was successful in maintaining the industrial product they also witnessed
strong sale in oil and gas and the industrial pipeline, they are also having the automotive
segment with the name Tata motors, and if you have noticed to them, then from the last 5
years TATA Motors have witnessed a great success, and they have sustained there
automotive segment with it, this also has witnessed the increase in there subset of sales from
19.5% to 25% during the financial year of 2019-2020, but there Europe division registered a
decline in the sales which was nearly 8% almost 2.37 million tonnes year on year.

37 | P a g e
 Chapter 4
Visualisation of the
project

38 | P a g e
4.1 Data Analysis /Visualisation of the project
Analysis based on schedule of change in working capital.
SCHEDULE FOR WORKING CAPITAL CHANGES
PARTICULARS 2020-21 2019-20 INCREASE DECREASE

CURRENT
ASSETS
Inventories 8603.79 10716.66 2112.87

Investments 6404.46 3235.16 3169.3

Trade receivables 3863.31 1016.73 2846.58

Cash and cash 1501.71 993.64 508.07

equivalence
Bank 170.00 233.23 63.23

loans 1555.95 1607.32 51.37

Other financial 351.54 230.41 121.13

assets
Other assets 854.99 1715.92 860.93

Total current 23305.75 19749.07

assets (A)
CURRENT
LIABILITIES
Borrowings - 7857.27 7857.27

Trade payables 10638.59 10600.96 37.63

Other finance 5274.11 5401.55 127.44

liabilities
Provisions 1074.43 663.86 410.57

Other liabilities 8013.00 5875.95 2137.05

39 | P a g e
Total current 25000.13 30399.59
liabilities (B)
NET WORKING (1694.38) (10650.52) 9230.33 11073.1
CAPITAL (A-B)

NET 1842.77
DECREASE
As per financials of tata steel year ended 31 March 2021.

Analysis
As we have clearly seen above net working capital of the company duly decreased by
1842.77 from year 2020 to 2021. In the year there is subsequent decrease in inventory, bank
balance and somewhat other financial assets followed by increase in cash in hand and
investment level. However, provisions have increased and borrowing got decrease but also
followed by increase in other liabilities. Overall, we can see the current liabilities has
decreased which is a good indicator of efficient company.

Net Working Capital

0
1 2

-2000 -1694.38

-4000

-6000

-8000

-10000
-10650.52
-12000

Fig 15 – Networking Capital

4.2 Operational Cycle (OC) Analysis of Tata Steel

Formula of operational cycle is OC=R+W+F+D-C
Thus, it stands for,
R= Raw material conversion period
W= Work in progress period
F= Finished goods conversion period
D=Debtor collection period
C= Creditor payment period

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4.2.1. Raw material conversion period (RMCP)
RMCP=Raw material stock / Raw material consumed *360
YEAR RAW RAW RMCP
MATERIAL MATERIAL
STOCK CONSUMED
2021 1146.05 13868.60 30

2020 1563.10 17407.03 32

As per financials of tata steel year ended 31 March 2021.

Raw Material Conversion Period

32.5
32
32

31.5

31

30.5
30
30

29.5

29
1 2

FIG 16 – Raw Material Conversion period

4.2.3 WORK IN PROGRESS COVERSION PERIOD(WPCP)

WPCP= Work in progress / Cost of production *360

YEAR WIP COST WPCP

2021 10057.18 1143340 3

2020 8070.41 1191760 2

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 Work In progress Conversion Period
3.5
3
3

2.5
2
2

1.5

0.5

0
1 2

FIG 17 – Work in Progress conversion period

4.2.4. Finished Goods Conversion Period (FGCP)

FGCP = Finished goods stock / cost of goods sold
YEAR FINISHED COST OF FGCP
GOODS GOODS SOLD
2021 64869 1143340 20

2020 60435.97 1191760 18

As per financials of tata steel year ended 31 March 2021.

Finished Goods Conversion Period

20.5
20
20

19.5

19

18.5
18
18

17.5

17
1 2

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Fig 18 – Finished goods conversion period

4.2.5 Debtors Collection Period (DCP)

DCP = Trade receivable /Sales *360
YEAR SALES DEBTORS DCP

2021 64869.00 3863.31 21

2020 60435.97 1016.73 6

As per financials of tata steel year ended 31 March 2021.

Debtors Collection Period

25

21
20

15

10

6
5

0
1 2

FIG 19 – Debtor’s collection period

4.2.6. Creditor Payment Period (CPP)

CPR=Payables / Cost of Goods sold * 360
YEAR PAYABLES COGS CPR

2021 10638.59 1143340 3

2020 10600.96 1191760 3

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As per financials of tata steel year ended 31 March 2021.

Creditor payment Period

3.5
3 3
3

2.5

1.5

0.5

0
1 2

Fig 20 – Creditor Payment Period

4.3 OPERATING CYCLE

Basic concept of operating cycle refers to number of days a particular organization takes to
complete their whole business process, which starts from the procurement of raw material to
conversion of raw material into finished goods, selling of finished goods and collecting the
cash after selling off the inventory, after looking out the different figure, we are here to check
out operating cycle of the company which is below using above mentioned formula to find
out.

YEAR OPERATING CYCLE

2021 71

2020 55

As per financials of tata steel year ended 31 March 2021.

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 Operating Cycle
80
71
70

60 55
50

40

30

20

10

0
1 2

Fig 21 – Operating Cycle

Analysis
There is deterioration in operating cycle of the firm over the year as 55 in 2020 to 71 in 2021.
Company has shown deterioration in its all-conversion period i.e., raw material, finished
goods, debtors, work in progress but credit payment period remains same. It is sign of firm
being less effective and less efficient as longer the operating cycle shows less efficiency of
the firm. It may be because of this pandemic company is not able to perform well in
converting their inventories into cash more effectively.

45 | P a g e
 Chapter 5
Learning Outcomes,
Suggestions &
References

46 | P a g e
5.1 Learning Outcomes
 Basic Understanding of working capital management, how different financial ratios is
important to know liquidity position and financial health of the organisation.
 How to calculate the operating cycle, my industry mentor had helped me to collect the
data which was not available in the financial statement of the organization, to
calculate the operating cycle of Tata steel.
 I experienced the corporate feeling which gives me a good exposure.
 Leadership quality, it’s all about the impact you have on other people.
 Time management is the big management lesson I have learnt as make individual
more divert to words it works.
 Importance of Teamwork, Punctuality and Dedication towards work.
 How to do a formal communication, the way how to communicate with each level of
management to get work done.

5.2 Suggestion
 Although organisation is following the Just in Time process, but we have witnessed
several incidences where there was the shortage of raw material like coal in the blast
furnace, this had delayed the operation sometimes, thus they should strictly follow
and monitor the Just in time process.
 Apart from this, Though Tata steel is having their own iron ore and mining, but they
should look for more source of raw material, which not hamper their operation.
 We have seen in the above chart of debtor collection period, that their collection
period was 6 days in the year 2020, but it has reached to 21 days in the year 2021, yes,
the major reason was pandemic, but they should be strict in collecting their money,
this debtor collection period of 2021 has made their money stuck, which could be
used in other investment or day to day operations. The company’s CFO needs to take
the decision that how could he make balance between inflow and outflow of cash in
cash flow.
5.3 Conclusion
 Current ratio of the firm is however not up to industrial standard, but it is
satisfactorily good to cover its current liabilities.
 There is slight growth in the current assets and short-term liabilities which is good for
company.
 Inventory turnover ratio of the firm shows improvement and depicts efficiency of the
firm but there is a downfall in receivable turnover.
 There is slight decrease in creditor turnover ratio, but it is negotiable as company may
face some issues due to this pandemic.
 There is decrease in net working capital of the firm over the year in comparison with
the previous year due to decrease in inventories of the firm.
 Investment is sufficient, and increase shows positive investment pattern.

47 | P a g e
  There is deterioration in operating cycle of the firm over the year. It is sign of firm
being less effective and less efficient as longer the operating cycle shows less
efficiency of the firm.
 Overall working capital of firm is good except few like other asset and inventories
over the year.
.
5.4 Reference
 Annual report of tata steel 2020-2021

 https://www.moneycontrol.com/financials/tatasteel/balance-sheetVS#TIS

 https://www.ibef.org/news/industry-news/steel

 https://www.valueresearchonline.com/stocks/3824/steel-authority-of-india-ltd/

#snapshot

 https://www.tatasteel.com/

 https://www.tatasteel.com/corporate/our-organisation/tata-group-profile/

 https://www.moneycontrol.com/financials/tatasteel/profit-lossVI/TIS#TIS

 https://en.wikipedia.org/wiki/Tata_Steel

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