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Tata Steel: Analyst meet extracts - Views on News from Equitymaster

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Tata Steel: Analyst meet extracts

Jun 30, 2008

Tata steel held an analyst meet on 26th June 2008. In this meet, the company discussed its performance during fiscal year FY08 and also its future plans. In this article, we have highlighted the key extracts. What is the company business?
Tata steel is world’s 6th largest steel company with existing annual crude capacity of 28 m tonnes. It is Asia’s 1st integrated steel plant and India’s largest private sector steel company. It is world’s 2nd most geographically diversified steel producer, with operations in 24 countries and commercial presence in over 50 countries.

Key extracts
FY08 performance: On a standalone basis, topline of the company grew by 12% to Rs.196.9 bn and bottom line by 11% to Rs. 46.9 bn. Sales volumes remained nearly flat at 4.78 m tonnes compared to FY07. The increase in realisations was mainly on account of higher steel prices. EBDITA margins increased by 2% to 41.8% compared to 39.7% in FY07. On consolidated basis, topline jumped five fold to Rs. 1,315 bn and bottomline three fold to Rs. 123 bn. However, EBDITA margins fell to 14% as compared to 30% in the previous year. This can be owed to lower margins at Corus.

Expansion plans: The company has plans to take its production capacity to 50 m tonnes by 2015 from the current level of 28 m tonnes. This will be achieved by both brownfield and greenfield expansions. Capacity of Jamshedpur plant will be raised from 5 m tonnes to 6.8 m tonnes in the current fiscal year and to 10 m tonnes by 2012. The 1st phase of 6 m tonne greenfield plant in Orissa is expected to go on stream by 2011. Corus has planned investment of around Rs. 12.6 bn by 2010. It also acquired a coalmine in Mozambique, which has deposits of 1.92 bn tonnes. Production will commence by 2010.

Financing: The financing for the expansion will be through internal generation, working capital improvement, operational improvement and synergies from the merger. The greenfield projects would be financed by structured equity.

Management targets: The company is targeting to achieve 30% ROCE by 2012. It expects sales volume growth of 20% each for next couple of years. It expects to achieve synergy of more than USD $ 600 m in FY09 from Corus.

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Mar 26, 2019 11:25 AM