Management Discussion & Analysis
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i) Financial Analysis of Tata Steel Group
Tulip UK was incorporated on 5th October, 2006 and commenced trading on 19th October, 2006. Tulip UK is a wholly-owned subsidiary of Tata Steel Asia Holdings Pte. Ltd., an unlisted company in Singapore. On 2nd April, 2007 Tulip UK’s subsidiary, Tata Steel UK Limited (‘TSUK’), completed the acquisition of Corus Group plc (‘Corus’), whose shares then ceased to be admitted to trading on the London and Amsterdam Stock Exchanges, and whose American depositary shares were delisted from the
New York Stock Exchange. Corus re-registered as a private limited company with effect from 16th July, 2007. The consolidated results have included those of Corus from 2nd April, 2007. Consequently, there is no comparable data for the prior year.
1) Net Sales/Income
Figures in Rs. crores
| Net Sales | FY08 |
FY07 | Inc./(dec.) |
| Tata Steel Corus NatSteel TSTH Others Eliminations & Adjustments |
19,693 100,218 7,658 4,077 3,327 (3,438) |
17,552 - 4,396 2,587 2,626 (1,947) |
2,141 100,218 3,262 1,490 702 (1,491) |
| Total | 131,536 |
25,213 | 106,323 |
The net sales of the Group in FY 2007-08 was at Rs. 131,536 crores as compared to Rs. 25,213 crores in FY 2006-07. The increase of Rs. 106,323 crores was mainly due to the inclusion of Corus Group financial statements for the first time. The net sales in the Indian operations increased by Rs. 2,141 crores mainly due to increase in the domestic prices of the products across segments over FY 2006-07 level. The turnover in NatSteel and Tata Steel Thailand also increased by Rs. 3,262 crores and Rs. 1,490 crores respectively mainly due to the increase in prices as well as increase in the sales volume. During FY 2007-08 Tata Metaliks financial statements were also included for the first time in the Group financial statements as a subsidiary, resulting in an increase in net sales of Rs. 216 crores.
The net sales of the Group in FY 2007-08 was at
Rs. 131,536 crores as compared to Rs. 25,213 crores in
FY 2006-07. The increase of Rs. 106,323 crores was mainly due to the inclusion of Corus Group financial statements for the first time. The net sales in the Indian operations increased by Rs. 2,141 crores mainly due to increase in the domestic prices of the products across segments over FY 2006-07 level. The turnover in NatSteel and Tata Steel Thailand also increased by
Rs. 3,262 crores and Rs. 1,490 crores respectively mainly due to the increase in prices as well as increase in the sales volume. During FY 2007-08 Tata Metaliks financial statements were also included for the first time in the Group financial statements as a subsidiary, resulting in an increase in net sales of Rs. 216 crores.2) Purchase of Finished and Semi-finished Products
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH Others Eliminations & Adjustments |
447 18,411 4,887 2,478 1,057 (1,009) |
451 - 3,154 1,606 1,373 (903) |
(4) 18,411 1,732 871 (316) (106) |
| Total | 26,270 |
5,682 | 20,588 |
Purchase of finished and semi-finished products for the Group increased from Rs. 5,682 crores in FY 2006-07 to Rs. 26,270 crores. The increase in NatSteel was primarily due to increase in volume of operations. The increase in Tata Steel Thailand was mainly on account of increase in volume of production as well as increase in prices of scrap.
3) Raw Materials Consumed
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH Others Eliminations & Adjustments |
3,430 29,317 1,694 165 419 (1,700) |
3,121 - 313 102 245 (294) |
308 29,317 1,381 63 173 (1,406) |
| Total | 33,325 |
3,489 | 29,836 |
The raw materials consumed for the Group increased by Rs. 29,836 crores from Rs. 3,489 crores in FY 2006-07 to Rs. 33,325 crores in FY 2007-08. The raw materials consumption of the Indian operations increased by 10% from Rs. 3,121 crores in FY 2006-07 to Rs. 3,430 crores in FY 2007-08 mainly due to higher use of coke imported at high prices during FY 2007-08. The increase in NatSteel was primarily due to increase in purchase of coal by a subsidiary of NatSteel for consumption by Tata Steel, India. During FY 2007-08 Tata Metaliks financial statements were also included for the first time in Group financial statements as a subsidiary resulting in an increase in raw materials consumed of Rs. 152 crores.
4) Payments to and Provisions for Employees
Figures in Rs. crores
| Staff cost | FY08 |
FY07 | Inc./(dec.) |
| Tata Steel Corus NatSteel TSTH Others |
1,590 14,513 303 75 193 |
1,455 - 220 67 143 |
135 14,513 82 8 50 |
| Total | 16,673 |
1,885 | 14,788 |
The increase in Indian operations was mainly due to annual increments, basic wages and dearness allowances. The increase was partly made good by a reduction in the manpower from 37,205 as on
31st March, 2007 to 35,870 as on 31st March, 2008. Tata Metaliks, whose financial statements were also incorporated for the first time in FY 2007-08 as a subsidiary, along with Tata Refractories, JUSCO,
Tata Steel KZN, TMILL (a logistics company) and other Joint ventures contributed to the increase in the staff cost.
5) Purchase of Power
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH Others Eliminations & Adjustments |
933 3,448 211 271 83 (16) |
922 - 190 191 32 (18) |
11 3,448 22 80 51 2 |
| Total | 4,929 |
1,315 | 3,614 |
The purchase of power for the Group increased from Rs. 1,315 crores in FY 2006-07 to Rs. 4,929 crores in FY 2007-08. The increases in purchase of power in NatSteel and Tata Steel Thailand were primarily due to the increase in the consumption as well as price of power, especially in Tata Steel Thailand, where the average power cost increased due to on-peak production. Increase of Rs. 50 crores was on account of power consumed by Rawmet, which became a subsidiary of Tata Steel from 31st March, 2007.
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