Management Discussion & Analysis
 |
 |
6) Freight and Handling Charges
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH TMILL Others Eliminations & Adjustments |
1,098 4,269 218 50 495 60 (184) |
1,117 - 121 34 287 50 (100) |
(19) 4,269 97 16 208 10 (84) |
| Total | 6,005 |
1,508 |
4,497 |
The Freight and handling charges increased by Rs. 4,497 crores from Rs. 1,508 crores in FY 2006-07 to Rs. 6,005 crores in FY 2007-08. Apart from the first time inclusion of Corus, the freight and handling charges for the Group increased primarily due to increases in volume of operations of TMILL (a logistics company). On account of increases in volume of operations of NatSteel and TSTH partly compensated by a decrease in the Indian operations due to change in the destination mix.
7) Depreciation
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH Others Eliminations & Adjustments |
835 3,059 80 104 59 - |
819 - 67 88 37 - |
15 3,059 13 17 22 - |
| Total | 4,137 |
1,011 |
3,126 |
The depreciation charges in the Indian operations increased due to depreciation on the additions relating to the 1.8 million tonnes expansion. The increase in Tata Steel Thailand was primarily due to change in the methodology of providing for depreciation from unit of production method to straight line method in order to bring uniformity in the group depreciation policy. Depreciation also increased in some other subsidiaries/Joint Ventures like Tata Refractories, Tata Metaliks (included as a subsidiary for the first time during FY 2007-08), Rawmet, Tata BlueScope etc.
8) Other Expenditure
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH TSAH Others Eliminations & Adjustments |
4,006 21,978 531 525 55 661 (526) |
3,595 - 405 384 229 377 (567) |
411 21,978 127 142 (174) 285 41 |
| Total | 27,231 |
4,422 | 22,809 |
Other expenditure represents following expenses:
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Stores consumption Fuel oil consumption Repairs to buildings Repairs to machinery Rent Rates and taxes Royalty Conversion charges Others (*) |
8,565 710 432 6,211 3,757 479 178 871 6,029 |
1,182 285 17 698 50 66 179 669 1,277 |
7,383 424 415 5,512 3,708 413 (1) 203 4,752 |
| Total | 27,231 |
4,422 | 22,809 |
(*) Includes Insurance charges, commissions, discounts and rebates, provision for wealth tax, adjustments relating to previous years, other expenses, provision for doubtful debts and advances, excise duty and expenditure transferred to capital. The other expenditure for the Group increased from Rs. 4,422 crores in FY 2006-07 to Rs. 27,231 crores in FY 2007-08. Apart from the first time inclusion of the financial statements of Corus in the financial statements of the Group, the increases were in the Indian operations, NatSteel, Tata Steel Thailand, Tata NYK Shipping Pte. Ltd. (a Joint Venture entered into during FY 2007-08), TMILL (logistics company), Tata Refractories and Tata Metaliks (first time included as a subsidiary).
The increases in the Indian operations were mainly due to the increases in the repairs, conversion charges, increase in liability for employees benefits as measured under Accounting Standard (AS) 15, expenses in connection with celebration of the Centenary Year of the company, expenses on raising of loans/rights issue, and expenditure on consultancy/feasibility studies etc.
The increases in NatSteel and Tata Steel Thailand were primarily due to increases in the stores and fuel oil consumption and other expenses attributable to their increase in volume of operations.
9) Interest (Net)
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Tata Steel Corus NatSteel TSTH TSAH Others Eliminations & Adjustments |
879 2,760 56 32 416 40 (1) |
174 - 46 44 124 23 - |
705 2,760 10 (11) 292 17 (1) |
| Total | 4,184 | 411 | 3,773 |
The interest charges increased from Rs. 411 crores in FY 2006-07 to Rs. 4,184 crores in FY 2007-08 mainly due to the first time inclusion of the financial statements of Corus as well as due to the interest on the borrowings taken by entities like Tata Steel, Indian operations and Tata Steel Asia Holdings for funding the acquisition of Corus.
10) Exceptional Items
Figures in Rs. crores
| FY08 |
FY07 | Inc./(dec.) | |
| Employees’ Seperation
Compensation Contribution for sports infrastructure Exchange difference Actuarial gain/(loss) on funds for employee benefits |
(227) (150) 595 5,907 |
(153) - - - |
(74) (150) 595 5,907 |
| Total exceptional gains/(losses) | 6,124 | (153) | 6,277 |
The Employee separation compensation was higher by 49% from Rs. 153 crores in FY 2006-07 to Rs. 227 crores in FY 2007-08. The increases were mainly due to inclusion of fresh cases and changes in discounting rates in FY 2007-08 over FY 2006-07.
A contribution of Rs. 150 crores towards development of sports infrastructure has been recognised as an exceptional expenditure during the current fiscal year.
Due to rupee appreciation against major foreign currencies in the current financial year, the company had a net exchange gain of Rs. 595 crores mainly due to revaluation of the forex loans and deposits. This has been recognised as an exceptional income during the year ended 31st March, 2008.
The actuarial gain is on account of recovery of bond yields used to discount scheme liabilities and recovery in asset values of the scheme funds. These gains are required to be accounted for through the Profit & Loss Account under Indian GAAP.
11) Fixed Assets (Net Block)
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Tata Steel Corus NatSteel Tata Steel Thailand Others |
12,624 24,966 518 1,195 2,660 |
11,041 - 522 1,292 1,366 |
1,583 24,966 (4) (97) 1,294 |
| Total |
41,963 | 14,221 | 27,743 |
The Fixed Assets of the Group increased by Rs. 27,743 crores from Rs. 14,221 crores as on 31st March, 2007 to Rs. 41,963 crores as on 31st March, 2008. Apart from the first time inclusion of the financial statements of Corus, the major reasons for increase in the Net Block were 1.8 million tonnes per annum expansion in Tata Steel, Indian operations, first time inclusion of the financial statements of Tata Metaliks Limited after it became a subsidiary, increase in the capital expenditures in other projects like Hooghly MetCoke, Tata Steel KZN (South Africa), Dhamra Port (Orissa, India) etc.
12) Stock-in-Trade
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Tata Steel Corus NatSteel Tata Steel Thailand Others |
2,047 17,447 1,005 450 460 |
1,828 - 590 454 324 |
220 17,447 415 (3) 135 |
| Total |
21,409 | 3,195 | 18,214 |
The Stock-in-trade increased by Rs. 18,214 crores from Rs. 3,195 crores as on as on 31st March, 2007 to Rs. 21,409 crores as on 31st March, 2008 mainly due to first time inclusion of financial statements of Tata Steel, UK (Corus). The stock increased in NatSteel due to increase in the volume of operations. The stock at Tata Steel, Indian operations increased due to increase in raw materials stock at the Works, Jamshedpur and also at the Ferro Alloys division. The financial statements of Tata Metaliks (post its becoming a subsidiary) were also incorporated for the first time in the financial statements of the Group resulting in increase for the Group to the extent of Rs. 192 crores (included in others above).
13) Sundry Debtors
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Tata Steel Corus NatSteel Tata Steel Thailand Others Eliminations & Adjustments |
543 16,951 648 305 602 (352) |
632 - 619 287 420 (271) |
(88) 16,951 29 17 182 (82) |
| Total |
18,696 | 1,687 | 17,010 |
The debtors balances as on 31st March, 2008 increased by Rs. 17,010 crores from a level of Rs. 1,687 crores as on 31st March, 2007. While the first time inclusion of the financial statements of Corus and Tata Metaliks contributed Rs. 16,951 crores and Rs. 76 crores respectivey towards the overall increase, there were increases in the Debtors level of the South-East Asian operations (NatSteel and Tata Steel Thailand) made good by a reduction in the debtors balances at Tata Steel, Indian operations. The reduction in Indian operations were in the areas of Flat Products and Long products in the Steel division mainly due to continuous monitoring coupled with introduction of insurance-backed factoring facility.
14) Cash and Bank Balances
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Tata Steel Corus NatSteel Tata Steel Thailand Tata Steel Asia Holdings Others |
465 3,174 94 331 0 168 |
7,681 - 79 5 3,033 90 |
(7,216) 3,174 15 326 (3,033) 77 |
| Total |
18,696 | 1,687 | 17,010 |
There was a reduction of Rs. 6,656 crores in the cash and bank balances as on 31st March, 2008 over 31st March, 2007 as the balances which were lying in the books of Tata Steel, Indian operations and Tata Steel Asia Holdings as on 31st March, 2007 were utilised during the financial year for funding the acquisition of Corus.
15) Loans & Advances
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Loans & Advances | 15,465 | 1,980 | 13,485 |
| Total |
18,696 | 1,687 | 17,010 |
The Loans and Advances increased by Rs. 13,485 crores mainly due to the first time incorporation of the financial statements of Corus. The advances in Corus represent mainly the advances towards the retirement benefit assets.
16) Current Liabilities and Provisions
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Current Liabilities Provisions |
26,394 6,458 |
5,444 2,080 |
20,950 4,378 |
| Total |
32,852 | 7,524 | 25,328 |
The Current Liabilities and Provisions for the Group increased by Rs. 25,328 crores mainly due to inclusion of the financial statements of Corus. The current liabilities and provisions for Corus represent payables on account of goods supplied, wages payable, other liabilities and provisions for retiring gratuities.
17) Loans
Figures in Rs. crores
| As on 31st March ‘08 |
As on 31st March ‘07 |
Change | |
| Secured Loans Unsecured Loans |
35,415 18,178 |
4,961 19,964 |
30,454 (1,787) |
| Total |
53,593 | 24,926 | 28,667 |
| Tata Steel Corus NatSteel Tata Steel Thailand Tata Steel Asia Holdings Others Eliminations & Adjustments |
18,022 31,836 1,100 650 597 1,596 (209) |
9,645 - 1,177 725 13,161 833 (615) |
8,376 31,836 (77) (75) (12,563) 764 406 |
| Total | 53,593 | 24,926 | 28,667 |
The loans have gone up from Rs. 24,926 crores as on 31st March, 2007 to Rs. 53,593 crores as on 31st March, 2008 mainly due to inclusion of the Secured loans of Corus from Banks and Financial Institutions. The increase in the loan balances of Tata Steel’s Indian operations represent 1% Convertible Alternate Reference Securities – USD 875 million, short-term bridge loans from State Bank of India and IDBI used for funding the Corus deal.
|
|
