100th Annual Report 2006-2007 - Tata Steel

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Management Discussion and Analysis As the process got extended, the Panel on Takeovers and Mergers in the UK (the Panel) set a deadline of 30th January, 2007 as the final date by which Tata Steel and CSN could revise their offers for Corus Group plc. The Panel subsequently announced in January 2007 that in order to provide an orderly resolution to this competitive situation, an auction process would be held on 30th January, 2007 to establish final bids from both Tata Steel and CSN. This auction process began in the evening of 30th January (Indian time) and ended in the early hours of 31st January, 2007 (Indian time) when the Panel announced that Tata Steel has won the auction to acquire Corus at a price of 608p per share. The Board of Corus subsequently recommended the Tata Steel offer to its shareholders who voted to approve Tata Steel’s Scheme of Arrangement, at an Extra-Ordinary General Meeting held on 7th March, 2007. Corus’ shares were subsequently suspended from trading on each of the London, New York and Amsterdam Stock Exchanges and the Scheme became effective on 2nd April, 2007. b) Corus Financing Structure The financing structure of the Corus transaction as on date is given below: Tata Steel Limited 100% India Rs. 11,750 crores (USD 2.7 billion) (funded by a mixture of its own cash resources and syndicate loans) to Tata Steel Asia Holdings Pte. Ltd. (TSAH). TSAH raised bridge loans of Rs. 10,900 crores (USD 2.5 billion) and Tulip UK Holdings raised a mezzanine loan of Rs. 2,600 crores (USD 0.6 billion) which was invested by way of equity in Tata Steel UK Ltd. To finance the balance of the consideration due under the acquisition, Tata Steel UK Ltd. (through its wholly owned subsidiary, Tulip Finance Netherlands BV) raised senior debts of Rs. 17,400 crores (USD 4.0 billion) and Mezzanine bridge of Rs. 13,500 cores (USD 3.1 billion). These loans were raised without recourse to Tata Steel. At the Board Meeting held on 17th April, 2007, Tata Steel’s Board approved the long term funding arrangement for the acquisition of Corus as per details given below: Rs. crores USD billion Equity Capital from Tata Steel Ltd. 17,850 4.10 Quasi - Equity / long term funding Total Equity and Quasi-Equity contribution (a) Non-recourse long-term debt at Corus (b) 11,570 2.66 29,420 6.76 26,730 6.14 Total (a+b) 56,150 12.90 Tata Steel Asia Holdings Pte. Limited 100% Tulip UK Holdings 100% Tata Steel UK Limited 100% Corus Group plc Singapore United Kingdom United Kingdom United Kingdom The Company proposes to infuse USD 4.1 billion as equity to part finance the transaction. The equity will comprise of USD 700 million from internal generation, USD 500 million of external commercial borrowings, USD 640 million from the preferential issues of equity shares to Tata Sons Ltd. in 2006- 07 and 2007-08, USD 862 million from a rights issue of equity shares to the shareholders, USD 1000 million from a rights issue of convertible preference shares and about USD 500 million from a foreign issue of equity-related instrument. The above financing structure is being re-organised to achieve fiscal unity in Netherlands and consequent tax efficiencies. c) Corus Financing On 2nd April, 2007, Tata Steel completed its acquisition of Corus Group plc (Corus) at a price of 608p per ordinary share in cash. The net funding requirement for the acquisition of Corus was Rs. 56,150 crores (USD 12.90 billion). The acquisition was initially funded by a cash contribution by Tata Steel of F) Review of Operations – Steel Division This year witnessed the best ever production of hot-metal (5.55 million tonnes, an increase of 7.3% as compared to 5.18 million tonnes in the previous year), crude steel (5.05 million tonnes, an increase of 6.7% as compared to 4.73 million tonnes in the previous year) and saleable steel (4.93 million tonnes, an increase of 8.3% as compared to 4.55 million tonnes in the previous year). 98
The “G” Blast Furnace in Jamshedpur crossed 2 million tonnes production of hot metal against its rated capacity of 1.8 million tonnes. The New Rebar Mill which was installed under the One million tonnes expansion project also achieved its rated capacity of 50,000 tonne per month during the year. The total production of rebars at the Jamshedpur Works almost reached the 1 million tonne mark during the year. The Hot Strip Mill produced 3.24 million tonnes as compared to 3.08 million tonne in the previous year. The Cold Rolling Mill crossed the milestone of 1.5 million tonnes against its rated capacity of 1.2 million tonnes. The all round increase in production came with improvements in the manufacturing processes specially in the areas of specific consumption of raw materials, energy, refractories, water and lime. The Company successfully completed in-house up-gradation of the “E” blast furnace in Jamshedpur. The “E” blast furnace which used to produce 1,050 tonnes per day before up-gradation will now be able to produce 1,350 tonnes per day. The coke and fuel rate consumption of the “E” blast furnace will also reduce due to the increase in the size of the furnace. Raw Materials The West Bokaro Collieries for the first time dispatched 1.9 million tonnes of clean coal at an average of 13% ash content. The reduced ash level in captive coal contributed significantly in substituting the more expensive imported low ash coal. In order to reduce the alumina content in the iron ore, a modern beneficiation plant for iron ore fines has been set up by the Company. Research & Development • Commercial production of various grades of high strength steel for automobiles was established for the first time. • Super ductile rebars and galvanised wires with thin organic coating were produced for the first time. • Breakthrough was achieved in establishing a new grade of cold rolled ultra low carbon electric grade steel which has significant usage in electrical appliances. G) Marketing & Sales Finished steel sales increased by 11.3% to 4.51 million tonnes as compared to 4.05 million tonnes in the previous year. Flat Products sales to the automotive sector were the highest ever at 0.86 million tonnes, an increase of 30% as compared to sales of 0.67 million tonnes in the previous year. Sales of specialty HR coils used for the long and cross members of chasis of heavy vehicles, high end cold rolled and coated sheets were also higher compared to last year. Enhancing Operational Efficiency Raw Material Consumption Ton/ton of Saleable sheet 4 3.31 3.11 Coke and Fuel Rate Consumption Fuel Rate (Coke rate + Injection) Kg/thm 600 587 578 Power Consumption Kwhr/tss 450 400 402 388 Specific Energy Consumption Gcal/tss 8 7 6.96 6.72 3 76 6 500 511 91 350 5 2 487 300 4 400 250 3 1 2 200 1 0 FY 2005-06 FY 2006-07 300 FY 2005-06 FY 2006-07 150 FY 2005-06 FY 2006-07 0 FY 2005-06 FY 2006-07 Coke Rate Coke Injection 99
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A Century of Trust 100th Annual Rep
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Tata Steel is Asia’s first and In
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Redefining steel with world-class p
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in a manner that ring-fences the Co
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Board of Directors Mr. R. N. Tata C
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The state-of-the-art Hot Strip Mill
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Distribution of Revenue 2006 - 2007
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1907-2007 JRD Tata with Pandit Jawa
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1907-2007 Tata Steel’s state-of-t
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This photograph taken by a Tata Ste
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Profit Sharing Bonus was granted fo
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A modern swimming pool at the G Tow
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steeljunction in Kolkata - India’
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Tata Steel has introduced high-end
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Tata Structura is a new-age constru
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Shareholder interaction at an Annua
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Within three weeks of the announcem
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It was 1956. The company was faced
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Community and environment : Improvi
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A Critical Care Unit, in the 850-be
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The Tata Steel Family Initiatives F
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The Tata Steel works, mines, collie
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An aerial view of the planned indus
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The Cold Rolling Complex at Jamshed
Page 49 and 50: 1933 Two new roughing and finishing
Page 51 and 52: From the early days, the Tata Steel
Page 53 and 54: Production Highlights • The best
Page 55 and 56: Aspire with T3 With the objective o
Page 57 and 58: Operational Highlights NSA increase
Page 59 and 60: was above the average total score o
Page 61 and 62: Blast furnaces at Corus’ integrat
Page 63 and 64: Corus produces strong, light steel
Page 65 and 66: Corus is British Triathlon’s main
Page 67 and 68: Review of Corporate Sustainability
Page 69 and 70: TSRDS focused on popularising repro
Page 71 and 72: Centenary Year The founder, Jamsetj
Page 73 and 74: esulting in a reduction in consumpt
Page 75 and 76: convertible preference shares and a
Page 77 and 78: expansion of crude steel making cap
Page 79 and 80: The bulk cargo berths are being des
Page 81 and 82: Corporate Governance Pursuant to Cl
Page 83 and 84: Annexure 'A' to Directors’ Report
Page 85 and 86: Form - B Form for disclosure of par
Page 87 and 88: 6 am 2 pm 12 noon 10 am 8 am 8 pm 6
Page 89 and 90: Particulars of technology imported
Page 91 and 92: Management Discussion and Analysis
Page 93 and 94: of 8%. In 2006, China produced 422.
Page 95 and 96: The Company plans to achieve these
Page 97 and 98: I. Strategic Rationale for acquisit
Page 99: Steelium (India’s first branded c
Page 103 and 104: Sales of manganese ore in the domes
Page 105 and 106: d) Payments and Provisions to Emplo
Page 107 and 108: m) Stores and Spare Parts and Stock
Page 109 and 110: The Company generated EVA of Rs. 2,
Page 111 and 112: Business and Operational Risk The m
Page 113 and 114: • Raising cost efficient funds fo
Page 115 and 116: Highlights 2006-07 2005-06 Rupees R
Page 117 and 118: Auditors’ Report TO THE MEMBERS O
Page 119 and 120: (b) In our opinion and having regar
Page 121 and 122: (xii) In our opinion and according
Page 123 and 124: Profit and Loss Account for the yea
Page 125 and 126: Cash Flow Statement for the year en
Page 127 and 128: Schedule forming part of the profit
Page 129 and 130: Schedule forming part of the balanc
Page 141 and 142: Schedules forming part of the balan
Page 143 and 144: SCHEDULE M : NOTES ON BALANCE SHEET
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SCHEDULE M : NOTES ON BALANCE SHEET
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Balance Sheet Abstract and Company'
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CAPITAL ACCOUNTS Financial Statisti
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Financial Ratios 2006-07 2005-06 20
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Name Category No. of Whether No. of
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the Tata Code of Conduct, which req
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Shareholding of the Directors in th
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Committees In addition to the above
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employees to report concerns about
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Market Information Market Price Dat
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Distribution of Shareholding Number
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Address for Correspondence : Tata S
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Certificate To the Members of TATA
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Statement pursuant to Section 212(8
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4. Subject to the matters referred
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Consolidated Profit and Loss Accoun
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Consolidated Cash Flow Statement fo
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Schedule forming part of the Consol
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Schedules forming part of the Conso
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SCHEDULE N : NOTES TO THE CONSOLIDA
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The Dimna reservoir near Jamshedpur
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100th Annual Report 2006-2007 - Tata Steel

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