100th Annual Report 2006-2007 - Tata Steel

Management Discussion and Analysis
There are various communication forums in the Company which
provide a platform to the entire cross section of employees
to raise and discuss various operational issues relating to the
performance of the Company.
Growth Execution Risk
All capital investment proposals are evaluated and reviewed
based on the Investment Management Process of the Company.
The proposals are evaluated by the Investment Management
Committee headed by the Managing Director against benchmark
criteria for investments including Hurdle Rate, Fitment Criteria for
Strategy and Performance and criticality before being put up for
the approval of the Executive Committee of the Board and the
Board of Directors. Major capital projects are also subject to post
completion review by the Corporate Audit for effectiveness of
these investments. The Company periodically submits the status
report of all major projects before the Executive Committee of
the Board and the Board of Directors.
Acquisitions & Post Acquisition Integration
The Company pursues acquisition opportunities as per its long
term strategic plans approved by the Board. All acquisition
proposals are evaluated by the Board. The Senior Management
of the Company reviews the integration process and provides
guidance to the integration teams for realisation of targets and
creating value from the acquisitions. The Company has made
significant progress in integrating NatSteel Asia Pte. Ltd. and
Tata Steel (Thailand) Public Company Ltd. through formation
of various integration committees and work-streams. To
facilitate the integration of Tata Steel and Corus, a Strategic
and Integration Committee has been formed to facilitate the
integration process.
Financial Risk
The Company actively monitors Foreign Exchange and Interest
Rate exposure. Based on an informed view and assessment of
these risks, it has developed a Risk Management Policy. The
Risk Management policy of the Company operates to achieve
greater predictability of earnings and provides a stable planning
environment.
The Company actively and selectively hedged its export
receivables and import payables during the last financial year.
The Company drew down USD 1.65 billion of foreign currency
loans on its Balance Sheet during the year and retained the
funds in liquid and highly rated foreign currency fixed deposits
prior to their deployment in order to minimise negative carry. As
part of the competitive bid process for the acquisition of Corus
Group plc, the Company was required under the UK Takeover
Code to provide “certainty of funds” in Pound Sterling. For this
purpose the Company made use of financial derivatives to
minimise risk during the transaction period.
The Company endeavours to pursue the following long-term
financing objectives as part of its Strategic Plan:
Various communication forums in
the company provide a platform
to employees to raise and discuss
operational issues relating to the
performance of the Company.
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