1.1 Background of The Study: A Study On Working Capital Management of TATA Steel LTD

1.
1 BACKGROUND OF THE STUDY
Working capital plays an important role in an organisation, as the company need capital for its day to
day expenditure. Thousands of companies fail each year due to poor working capital management
practices. Entrepreneurs often don’t account for short term disruptions to cash flow and are forced to
close their operations.
In simple term, working capital s an excess of current assets over the current liabilities. Good
working capital management reveals higher returns of current assets than the current liabilities to
maintain a steady liquidity position of the company. Otherwise, working capital is a requirement of
funds to meet the day to day working expenses. So a proper way of management of working capital
is highly essential to ensure a dynamic stability of the financial position of an organisation.
Working capital management deals with maintaining the levels of working capital to optimum
because if a concern has inadequate opportunities and if the working capital is more than required
then the concern will lose money in the form of interest on the form of blocked funds. Therefore
1 working capital management plays a very important

A study role in the profitability
on working of a company.
capital management And Ltd
of TATA Steel also
due to heavy competitions among different organizations it is now compulsory into look after
working capital
Tata steel ltd established in 1907, is Asia’s first and India’s largest private sector steel company. Tata
steel is among the lowest cost producers of steel in the world and one of the few select steel
companies in the world that is EVA+(economic value added). Its captive raw materials resources
and the state of the art 4.9 mtpa plant at
Jamshedpur, in Jharkhand state, India gives it a competitive edge. During the project work, it is being
analysed the working capital position of the organisation. Decisions relating to working capital and
short term financing are referred to as working capital management. The goal of working capital
management is to ensure that the firm is able to continue its operations and that it has sufficient
money flow to satisfy both maturing short-term debt and upcoming operational expenses.
Mount Zion School of Business Management, Kadammanitta

1.2. STATEMENT OF THE PROBLEM
Working capital management or simply the management of capital invested in current asset is the
focus of the study. So the topic under study here is working capital management of Tata Steel
Company Ltd.
WORKING CAPIAL s the fund invested by a firm in current assets. Now in a cut throat competitive
era where each firm competes with each other to increase their production and sales , holding of
sufficient current assets have become mandatory as current assets include inventories and raw
materials which are required for smooth production runs. Holding of sufficient current assets will
ensure smooth and uninterrupted production but at the same time it will consume lot of working
capital. Here creeps the importance and need of efficient working capital management. Working
capital management aims at managing capital assets at optimum level, the level at which it will aid
smooth running of production and also it will involve investment of nominal working capital in
capital assets.
2 A study on working capital management of TATA Steel Ltd
1.3. NEED AND SIGNIFICANCE OF THE STUDY
The study helps to get a clear understanding about the workingcapital management in Tata steel
company ltd. The study of working capital management is very helpful for the organisation to know
its liquidity position. The study is relevant to know the day to day expenditure. This study is relevant
to give an idea to utilise current assets.
1.4. SCOPE OF THE STUDY
The management of assets in any organisation is an important part of overall management. In this
project, analyst is dealing with 5 years balance sheet and profit and loss account and some other
details also. For analysing, various tools and techniques are used to determine the profitability,
liquidity, solvency etc. various ratios are used for the analysis. The study also provides also provides
suggestion on the findings. This project may serve as an aid for chalking out plans in the structure.

1.5 OBJECTIVES OF THE STUDY
The main objective of the study is:
 To study the working capital management of the company.
Secondary objectives are:
 To study the concept and importance of working capital management.

 To study the liquidity position of the firm.
 To assess the relationship between working capital management and profitability of the firm.
 To offer suitable suggestions for the betterment of the company.
1.6 LIMITATIONS OF STUDY
The topic working capital management is itself a very vast topic yet very important also. Due to time
restraints it was not possible to study in depth in getting knowledge what practices are followed at
HUL.
 Many facts and data are such that they are not to be disclosed because of the confidential
nature of the same.
 Since the financial matters are sensitive in nature the same could not acquired easily.

1.7 ORGANISATION OF THE REPORT
Chapter 1: INTRODUCTION
The chapter 1 Introduction includes the background of the study, need and significance of the study,
statement of the problem, scope of the study, objectives of the study and limitation of the study. This
chapter gives an overview of the project.
Chapter I firstly illustrates the background of the study, it gives first impression about the project.
The background of the study includes relevance of the topic as well as the reason for choosing such a
topic with that of selected company.
The second part indicates the need and significance of the study. It tells about the importance of the
topic and how it is relevant to the present context of the organization.
The next component of the first chapter is statement of the problem. This includes the description of
the problem currently existing which are needed to be addressed.
4 Another head is objectives of the study. Here the major

A study onobjectives of themanagement
working capital study are specified.
of TATA Steel Ltd
The final component of first chapter is limitation of the study. Here, the major limitations that are
faced during the study are discussed.
Chapter 2: PROFILE
The second chapter deals with the details of industry and company profile.
Chapter 3: LITERATURE REVIEW
The literature review discuss about the reviews that are based on the previous studies andresearch
made about the topic. The researcher tries to explain the previous studies in his own views and
words.
Chapter 4: THEORETICAL FRAMEWORK
The fourth chapter deals with theories and concepts used on the topic of the study. This chapter
contains definition, process features, fundamental analysis, industry analysis, company analysis,
technical analysis of the topic.

Chapter 5: RESEARCH METHODOLOGY
In this chapter the objectives of the research, hypothesis of the study, research design, sources of
data, data analysis techniques such a ratio analysis, correlation, schedule of changes in working
capital are discussed.
Chapter 6: DATA ANALYSIS
Chapter 6 Deals with data analysis of financial statements from 2013 to 2017 using data analysis
techniques and accordingly interpretations are made.
Chapter 7: FINDINGS
The sixth chapter highlights finding of the study which are found out from data analysis.
Chapter 8: RECOMMENDATIONS
This chapter presents the recommendations. Based on findings, recommendations have been made.
5 Chapter 9: CONCLUSION A study on working capital management of TATA Steel Ltd
The last chapter shows a summary of the project which is based on analysis, findings and
recommendations.

2.1 INDUSTRIAL PROFILE
The iron and steel industries are among the most important industries in India. During 2014 through
2016, India was the third largest producer of raw steel and the largest producer of sponge iron in the
world. The industry produced 82.68 million tons of total finished steel and 9.7 million tons of raw
iron. Most iron and steel in India is produced from iron ore.
Policy for the sector is governed by the Indian Ministry of Steel, which concerns itself with
coordinating and planning the growth and development of the iron and steel industry, both in the
public and private sectors; formulation of policies with respect to production, pricing, distribution,
import and export of iron and steel, Ferro alloys and refractory’s; and the development of input
industries relating to iron ore, manganese ore, chrome ore and refractory’s etc., required mainly by
the steel industry.
Most of the public sector undertakings market their steel through the Steel Authority of India(SAIL).
The Indian steel industry was de-licensed and de-controlled in 1991 and 1992 respectively.
6 GLOBAL SCENARIO A study on working capital management of TATA Steel Ltd
The iron and steel industry is a very complex sector that is strongly related with the rest of the
economy due to the importance of steel products for industries such as construction, automotive, and
other manufacturing sectors. Moreover, the iron and steel industry demands significant amounts of
raw materials and energy, and most companies producing raw materials are located remote from the
areas of highest steel demand. In consequence, both steel products and inputs are traded
internationally (mostly by sea) and in large quantities, what additionally complicated analyses of the
iron and steel industry. Steel prices depend on several variables, and there is not a single price for
steel since there is a great variety of steel products traded. Those prices depend on supply and
demand interaction (between steel producers and consumers, but also on interaction with other
industries competing for the same inputs), and on transport conditions. As concerns the ownership
structure, the steel industry consists of some large firms that operate globally and produce significant
output, and many small firms that operate at a lesser scale. Recently, some of those firms have
consolidated into large multinationals (such as Arcelor Mittal, formed in 2006 by the merger of
Arcelor and Mittal Steel, Arcelor being the result of the previous merger of Aceralia (ES),Usinor
(FR), and Arbed (LX) in 2002). The results of thisarticle form the basis for further long- and mid-
term analyses of the development of the global steel industry. The main conclusion of the paper is

that any future analysis of the iron and steel industry should be based on quantitative modelling
tools that: (i) properly capturethe technological diversity of the industry and the keyfeatures of the
supply chain, (ii) are able to consider thestrategic behaviour of all the key players of the industry.
Commentingon the outlook, Mr Al Remeithi,Chairman of the world steelEconomicsCommittee said,

"The current SRO suggests thatglobal steel demand will continue to grow in2019, more than we
expected in thesechallenging times, mainly due to China. In the restof the world, steel demand
slowed in 2019 asuncertainty, trade tensions and geopolitical issuesweighed on investment and trade.
Manufacturing,particularly the auto industry, has performedpoorly contracting in many countries,
however inconstruction, despite some slowing a positivemomentum has been maintained.
While the global economic outlook is highlyunpredictable, we expect to see further growth insteel
demand in 2020 of 1.7%, with emerging anddeveloping economies excluding Chinacontributing
more. This forecast faces significantdownside risks if the current level of uncertaintyprevails."
Steel demand in the developed worldstagnates with weakening manufacturing. After growing by
1.2% in 2018, steel demand inthe developed economies is expected to show asmall contraction of
-0.1% in 2019. The consumersectors and construction maintained positivemomentum, however
manufacturing slumpeddue to a deteriorating environment for exportand investment. In 2020, with
the effect of sometechnical rebound, steel demand in thedeveloped world is expected to grow by
0.6%.
INDIAN SCENARIO
India was the world's second-largest steelproducer@ with production standing at 106.5 MT in2018.
The growth in the Indian steel sector has beendriven by domestic availability of raw materials suchas
iron ore and cost-effective labour. Consequentlythe steel sector has been a major contributor
toIndia's manufacturing output.
The Indian steel industry is very modern with stateof-the-art steel mills. It has always strived
forcontinuous modernisation and up-gradation of olderplants and higher energy efficiency levels.
Indian steel industries are classified into threecategories such as major producer, main producersand
secondary producers.

Market Size
India's finished steel consumption grew at a CAGR of5.69 per cent during FY08-FY18 to reach
90.68 MT. India's crude steel and finished steel productionincreased to 103.13 MT and 104.98 MT in
2017-18,respectively. In 2017-18, the country's finished steel exportsincreased 17 per cent year-on-
year to 9.62 milliontonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports of
finished steel stood at 0.72 MT and 1.12 MT, respectively, in FY20P(up to May).
India was the world's second largest steel producer, asof 2018. The country is slated to surpass USA
tobecome the world's second largest steel consumer in2019. In India, as per Indian Steel Association
(ISA),steel demand to grow by over 7 per cent in both 2019-20 and 2020-21. In FY19, India
produced 131.57 million tonnes (MT)and 106.56 MT of gross finished steel and crude
steel,respectively. Exports and imports of finished steel stood at 4.02 MTand 3.94 MT, respectively,
in FY20P (up to September).The Government has taken various steps to boost thesector including
the introduction of National SteelPolicy 2017 and allowing 100 per cent Foreign Direct. Investment
(FDI) in the steel sector under theautomatic route. Between April 2000 and March 2019,inflow of
8 US$ 113.12 billion has been witnessed A in themetallurgical
study on working capitalindustries as ofForeign
management Direct
TATA Steel Ltd
Investment(FDI).
The Government has launched the National SteelPolicy 2017 that aims to increase the per capita
steelconsumption to 160 kgs by 2030-31. The governmenthas also promoted Policy which provides a
minimumvalue addition of 15 per cent in notified steel productswhich are covered under preferential
procurement. National Mineral Development Corporation is expectedto invest US$ 1 billion on
infrastructure in next threeyears to boost iron production.
Ancient India
Recent excavations in the Middle Ganges Valleyconducted by archaeologistRakesh Reddy with

theadvice of wife Aditi Venugopal show iron workingin India may have begun as early as 1800
BCE. Infact, the practice manufacturingpracticalmetals first began in India. Archaeological sitein
India, such as Malhar, Dadupur, Raja NalaKaTila, and Lahuradewa in the state of Uttar Pradeshshow
ironimplements in the period between 1800BCE-1200 BCE. Sahi (1979: 366) concluded thatby the
early 13th century BCE, iron smelting wasdefinitely practiced on a large scale in India,suggesting
that the date the technology's earlyperiod may well be placed as early as the 16 th century
BCE.161.Some of the early iron objects found in India aredated to 1400 BCE by employing

radiocarbondating. 8 Spikes, knives, daggers, arrowheads,bowls, spoons, saucepans, axes, chisels,
tongs,door fittings etc. ranging from 600 BCE-200 BBC have been discovered at several
archaeologicalsites.
The beginning of the 1st millennium BCE sawextensive developments in iron metallurgy inIndia.9)
Technological advancement and masteryof iron metallurgy was achieved during this periodof
peaceful settlement. The years between 322185 BCE saw several advancements made to
thetechnology involved in metallurgy during thepolitically stable Maurya period (322-185
BCE).Greek historian Herodotus (431-425 BCE) wrotethe first western account of the use of iron
inIndia.
Medieval era
The world's first iron pillar was the Iron Pillar ofDelhi erected during the time of
ChandraguptaVikramaditya 37541314. The swordmanufactured in Indian workshops are
mentionedin the written works of Muhammad al-Idrisi(flourished 1154). Indian Blades made of
Damascus steel found their way Persia. During the 14th century, European scholars studiedIndian
casting and metallurgy technology. Indian metallurgy under the Mughal emperor Akbar(reign:
15561605 produced excellent smallfirearms] Gommans (2002) holds that Mughalhandguns were
stronger and more accurate thantheir European counterparts. In 1667 it has been estimated 5 tons of
steel, and25 tons of iron ware were exported from India, While the Dutch are reported to have
exported 46 tonnes of Wootz steel during the 17th century.
Colonial era
Modern steel making in India began with the setting of first blast furnace of India at Kulti in1870 and
production began in 1874, which was setup by Bengal Iron Works. While first modern
steelmanufacturing plant was set up at the Gun & ShellFactory (GSF), in 1801,21 and along with the
Metal& Steel Factory (MSF), at Calcutta, 22 both stillbelonging to the Ordnance Factory Board. All
hadfollowed on from the establishment of Coal miningin India, in the late 18th century, which
eliminatedthe need for approximately 14.5 tonnes ofcharcoal to be created to smelt each tonne
ofiron,231 and offering a source of power for thetrains and river boats used to carry the ores,
andsmelted metals. The Tata Iron and Steel Company(TISCO) was established by Dorabji Tata in
1907,as part of his father'sconglomerate. By 1939 itoperated the largest steel plant in the
BritishEmpire, and accounted for a significant proportionof the 2 million tons pig iron and 1.13 of

steelproduced annually. The company launched amajor modernisation and expansion program
in1951.
The British were aware of the historical role metalworking had played in supporting
indigenouspowers through the production of arms andammunition. This resulted in the introduction
ofthen Arms Act in 1878 which restricted access tofirearms. They also sought to limit India's ability
tomine and work metals for use in future wars andrebellions in areas like metal-rich Rajasthan.
India'sskill in casting brass cannon had made Indianartillery a formidable adversary from the reign
ofAkbar to the Maratha and Sikh wars 300 yearslater. By the early 19th century most of the minesin
Rajasthan were abandoned and the miningcaste was 'extinct.
During the Company period, military opponentswere eliminated and princely states extinguished,and
the capacity to mine and work metalsdeclined, largely due to British tariffs. As late asthe Rebellion
of 1857, because the mining of leadfor ammunition at Ajmer was perceived as athreat, the British
closed mines.
Modern era
Prime Minister Jawaharlal Nehru, a believer inHarold Laski's Fabian socialism, decided that
thetechnological revolution in India neededmaximisation of steel production. He, therefore,formed a
government owned company, HindustanSteel Limited (HSL) and set up three steel plants inthe1950s.
The Ordnance Factory Board continues to be oneof the largest metallurgical organisations of
Indiawith its dedicated metallurgical factories at HeavyAlloy Penetrator Project, Trichy for non-
ferrousmetals such as tungsten for anti-submarinewarfare and tank ammunition the only plant
inIndia, Grey Iron Foundry, Jabalpur, for makingengines and armoured body of vehicles Ordnance
Factory Muradnagar for special alloysand steel, Ordnance Factory Ambajhari foraluminium, brass
and other special alloys foraerospace, rockets, bombs and missiles. The premier Defence
Metallurgical ResearchLaboratory (DMRL) of the DRDO started at theMetal & Steel Factory,
Kolkata, later to be shifted toHyderabad.
The Indian steel industry began expanding intoEurope in the 21st century. In January 2007
India'sTata Steel made a successful $11.3 billion offer tobuy European steel maker Corus Group. In
2006 Mittal Steel Company (based in London but withIndian management) acquired Arcelor for

$34.3 billion to become the world's biggest steel maker,ArcelorMittal, with 10% of the world's
output.
STATE SCENARIO
Kerala was one of the most industrially rich states in India during the fifties. Thepresence of more
than 50 small and medium steel manufacturing units in the state have beencontributing extensively
for the development of the state. The industrial scenario in Kerala isan undergoing a renaissance and
it is leftfor the steel manufacturers who areoperational hereto seize the emerging opportunities of
growth without detrimentally affecting the environment.The private sector steel industry in Kerala is
only a decade old, And this relatively youngindustrial sector is serving the coming housing sector
and is there contributed substantiallyto the state's exchequer. With the state's housing sector all set to
grow manifold this sure isbound to move upwards in the days to come.
Steel Manufacturers Association of Kerala:
11 Brought together all manufacturers of Kerala Secondary

A study on workingSteel
capitalSector and formed
management of TATA the
SteelSteel
Ltd
Manufacturers Association of Kerala which is the only associationrepresenting steelindustry in
Kerala

2.2. COMPANY PROFILE
Established in 1907, Tata Steel is Asia's first and India's largest privatesector steel company. Tata
Steel is among the lowest cost producers ofsteel in the world and one of the few select steel
companies in theworld that is EVA (Economic Value Added).
Tata Steel is the world's 6th largest steel company with an existingannual crude steel production
capacity of 30 Million Tonnes.Tata Steel has a balanced global presence in over 50
developedEuropean and fast growing Asian markets, with manufacturing units in26 countries. Tata
Steel's Jamshedpur (India) Works has a crude steel productioncapacity of 6.8 MTPA which is slated
to increase to 10 MTPA by 2010.
It is one of the top steel producing companiesglobally with annual crude steel deliveries of27.5
million tonnes (in FY17), and the secondlargest steel company in India (measured bydomestic
production) with an annual capacity of13 million tonnes after SAIL. Tata Steel operates in 26
countries with keyoperations in India, Netherlands and UnitedKingdom, and employs around 80,500
people. Its largest plant (10 MTPA capacity) is located inJamshedpur, Jharkhand. In 2007, Tata
Steelacquired the UK-based steel maker Corus. it was ranked 486th in the 2014 Fortune GCorus 500
ranking of the world's biggest corporations. It was the seventh most valuable Indian brand of2013 as
per Brand Finance.
HISTORY
Tata Iron and Steel Company (TISCO) was foundedby Jamsetji Tata and established by Dorabji
Tataon 26 August 1907. TISCO started pig ironproduction in 1911 and began producing steel in1912
as a branch of Jamsetji TataGroup. The first steel ingot wasmanufactured on 16 February 1912.
During theFirst World War (1914-1918), the company maderapid progress. By 1939, it operated the
largeststeel plant in the British Empire. The companylaunched a major modernization and
expansionprogram in 1951. Later, in 1958, the program wasupgraded to 2 million metric tonnes per
annum(MTPA) project. By 1970, the companyemployed around 40,000 people at Jamshedpur,and a
further 20,000 in the neighbouring coalmines. In 1971 and 1979, there wereunsuccessful attempts to
nationalise thecompany. In 1990, the company began toexpand, and established its subsidiary, Tata
Inc., inNew York. The company changed its name fromTISCO to Tata Steel Ltd. in 2005.

Tata Steel on Thursday, 12 February 2015 announced buying three strip product servicescentres in
Sweden, Finland and Norway from SSABto strengthen its offering in Nordic region. Thecompany,
however, did not disclose the value ofthe transactions.
In September 2017, ThyssenKrupp of Germany andTata Steel announced plans to combine

theirEuropean steel-making businesses. The deal willstructure the European assets as
ThyssenkruppTata Steel, an equal joint venture. Theannouncement estimated that the company
wouldbe Europe's second-largest steelmaker, and listedfuture headquarters in Amsterdam.
ACQUISITIONS OF TATA STEEL LTD
NatSteel in 2004:
In August 2004, Tata Steelagreed to acquire the steel making operations ofthe Singapore-based
NatSteel for $486.4 million incash. NatSteel had ended 2003 with turnover of$1.4 billion and a profit
before tax of$47 million. The steel business of NatSteelwould be run by the company through a
whollyowned subsidiary called Natsteel Asia Pte Ltd. The acquisition was completed in
13 February2005. At the time of acquisition, NatSteel hada
A study on capacity
working capitalofmanagement
about 2 million
of TATAtonnes per
Steel Ltd
annum offinished.
Millennium Steel in 2005:
Tata Steel acquired amajority stake in the Thailand-based steelmakerMillennium Steel for a total cost
of $130 million. Itpaid US$73 million to Siam Cement for a 40% stake and offered to pay 1.13 baht
per share foranother 25% of the shares of othershareholders. For the year 2004, MillenniumSteel had
revenues of US$406 million and a profitafter tax of US$29 million. At the time ofacquisition,
Millennium Steel was the largest steelcompany in Thailand with a capacity of 1.7 millionmetric
tonnes per annum, producing long productsfor construction and engineering steel for autoindustries.
Millennium Steel has now beenrenamed to Tata Steel Thailand and isheadquartered in Bangkok. On
31 March 2013,it held approx. 68% shares in the acquiredcompany.
Core steel in 2007:
On 20 October 2006, Tata company signed a deal with Anglo-Dutch company, Corus tobuy 100%
stake at £4.3 billion ($8.1 billion) at 455percent per share.23 On 19 November 2006, theBrazilian
steel company Companhia SiderúrgicaNacional (CSN) launched a counter offer for Corusat 475

percent per share, valuing it at £4.5 billion. In 2005, Corus employed around 47,300
peopleworldwide, including 24,000 in the UK. At the time of acquisition, Corus was four times
largerthan Tata Steel, in terms of annual steelproduction. Corus was the world's 9th largestproducer
of Steel, whereas Tata Steel was at 56 th position. The acquisition made Tata Steel world's5th largest
producer of Steel.
Steel Engineering and Vinausteel in 2007:
Steel through its wholly owned Singaporesubsidiary, NatSteel Asia Pte Ltd, acquiredcontrolling
stake in both rolling mill companieslocated in Vietnam: Structure Steel Engineering PteLtd (100%
stake) and Vinausteel Ltd (70% stake).The enterprise value for the acquisition was$41 million. With
this acquisition, Tata Steel gothold of two rolling mills, a 250k tonnes per yearbar/wire rod mill
operated by SSE Steel Ltd and a180k tonnes per year reinforcing bar mill operatedby Vinausteel Ltd.
Bhushan Steel in 2018:
Tata Steel acquired theentire company in 2017-18, when Insolvencyproceedings were initiated
14 against the formercompany on 26 July 2017 under IBC.
A study So Tatacapital
on working Steelemerged as the
management of highest bidder,
TATA Steel Ltd
and renamed thecompany Tata Steel BSL.
SHAREHOLDINGS
As on 31 March 2018, Tata Group held 31.64% shares in Tata Steel. Over 1 million
individualshareholders hold approx. 21% of its shares. LifeInsurance Corporation of India is the
largest nonpromoter shareholder in the company with 14.88% shareholding.
Shareholder Shareholding
Promoters: Tata group 31.64%
companies
Insurance companies 21.81%
Individual shareholders 22.03
Foreign institutional investors 15.35%
GDRS 02.41%
other 07.05%
Total 100%
BOARD OF DIRECTORS

Parvatheesam K - Company Secretary & Chief Legal Officer
(Corporate & Compliance)
T. V. Narendran - Chief Executive Officer andManaging Director
V.K. Sharma - Non-Executive Director
Peter Blauwhoff - Independent Director
Deepak Kapoor - Independent Director
Saurabh Agrawal- Non-Executive Director
Koushik Chatterjee- Executive Director and Chief Financial Officer
Aman Mehta. - Independent Director
N. Chandrasekaran - Chairman of the Board andNon-Executive Director
Mallika Srinivasan - Independent Director
VISION& MISSION OF THE COMPANY
VISION:
They aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship.
MISSION:
Consistent with the vision and values of the founderJamsetji Tata, Tata Steel strives to strengthen
India's industrial base through effective utilization of staff and materials. The means envisaged to
achieve this are cutting edge technology and high productivity, consistent with modern management
practices.
Tata Steel recognizes that while honesty and integrity are essential ingredients of a strong and stable
enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks

to scale the heights of excellence in all it does in an atmosphere free from fear, and thereby reaffirms
its faith in democratic values.
PRODUCTS AND SERVICES
 Automotive Steels
 Galvano
 Tata Agrico
 Tata Astrum
 Tata Bearings
 Tata Ferro Alloys And Minerals Division
 Tata Steel Industrial By-Products
 Management Division (IBMD)
 Tata Pipes
 Tata Precision Tubes
16  Raw Materials And Responsible Mining
A study on working capital management of TATA Steel Ltd
 Tata Shaktee
 Tata Steelium
 Tata Structure

3. LITERATURE REVIEW
Review of literature provides information to the researcher regarding the previous work done in the
area of research and thereby help them in identifying the theoretical framework and methodological
issues relevant to the study. It provides the researcher a proper direction to carry out their research
work and enables them to a meaningful conclusion.
 HERZFELD B (1990) mitted that "Cash is King's say the money managers who share the
responsibility of running this country's businesses. And with banks demanding more from
their prospective borrowers, greater euphanix hen placed on those accountable for so called
working capital management. Working capital management refers to the management to the
management of current or short term assets and short term liabilities. In essence to operate its
business. Here are things you should know about working capital management.
 KOUMA GUY(2001) in a study on working capital management in health care working
capital is the required to finance the day to day operations or an organization Working capital
may be required to bridge the gap between buying of stocked items to eventual payment for
goods sold on account. Working capital also has to find the gap when products are on hand
but being held in stock. Products in stock are at full cost effectively they are company cash
resources which are out of circulation therefore additional working capital is required to meet
the gap which can only be reclaimed when the stocks are sold and payment for them is
received, Working capital requirements have to do with profitability and much more to do
with its flow.
 BENEDA, NANCY:ZHANG,YIEI (2008) studied impact of working capital management on
the operating performance and growth of new public companies. The study also shed light on
the relationship of working capita with debt level, firm risk industry. Using sample of initial
public offering, the study finds a significant positive association between higher levels of
accounts receivable and operations performance. The study further finds that Maintaining
control over levels of cash and securities inventory, fixed assets and accounts.
 Filbeck Greg and Krueger Thomas M. (2005) base their study on the ratings of working
capital management published in CFO magazines. The findings of the study provides insight
into working capital performance and working capital management, which is explained by
macro economic factors, interest rates, competition, etc., and their impact on working capital
management. The article future studies the impact of working capital management on stock
prices.

 Rosenbluth Frances (2010) makes a close study of the role that networks canplay in boosting
women's representation in the personal, professional andpolitical arenas. It has been found
that women lag behind men in their access toprofessional networks. At the end of the study
the author concludes with
 theobservation that gender equality will remain out of reach until women and menhave a
statistically equal shot at being productive, which at the top of the careerladder invariably
includes the difficult-to-quantify but realvalue of networkpower.
 Rahman Mohammad M. (2011) focuses the -relationand workingcapital and profitability. An
effective working capital management has apositive impact on profitability of firms. From
the study it is seen that in thetextile industry profitability and working capital management
position are foundto be up to the mark.
 Dr Arshad Ahmad and Dr Matarneh Bashar (2011)Research came with registration technique
which is very powerful statistical tool to forecast the working capital the area of working
capital management, that is possible to make the projection after starting the
averagerelationship in the past. For the purpose different components are used and to be
finalized result. And it is presentedin diagrammatic way as well mathematical way.
 Dr Kadiumi hair A. and Dr Ramadan Imad Z. (2012):-The evaluation was made in 49
Jordanian companies they are listed in Ammnan Stock Exchange, The carried withtopic like
effect of working capital management on the profitability in a targeted companies for the
period to2009. This goal could be achieved with help of two different measures one is for
profitability and another one is forperformance of working capital management 1 proxy and
five peonies use full for respective goal. For theestimation two regression model fixed effects
model und ordinary least mode are used.
 MAYNARD E REFUSE (1996) argued that attempt to improve working capital by

delayingmoto creditors is counter-productive to individual and to the economy as a
whole.Claims that altering debtor and creditor level for individuals within a value of
systemwill rarely produce any net benefit Proposes that stock reduction generates system-
widefinancial improvements and other important benefits. Urges these organisations
seekingconcentrated working capital reduction strategies to focus on stock management
strategies based on lean supply chain techniques.

4. THEORETICAL FRAMEWORK OF THE STUDY
WORKING CAPITAL MANAGEMENT
Working capital management involves the relationship between a firm's short-term assets and its
short-term liabilities. The goal of working capital management is to ensure that a firm is able to
continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and
upcoming operational expenses. The management of working capital involves managing inventories,
accountsreceivable and payable, and cash.
Traditionally, investors, creditors and bankershave considered working capital as a critical element to
watch, as important as the financialposition portrayed in the balance sheet and theprofitability shown
in the income statement. Working capital is a measure of the company'sefficiency and short term
financial health. It refersto that part of the company's capital, which isrequired for financing short-
term or current assetssuch a cash marketable securities, debtors andinventories. It is a company's
surplus of currentassets over current liabilities, which measures theextent to which it can finance any
increase inturnover from other fund sources. Funds thus,invested in current assets keep revolving and
areconstantly converted into cash and this cash flowis again used in exchange for other current
assets.
Definition-
According to Guttmann &Dougall- Excess of currentassets over current liabilities.
According to Park &Gladson- The excess of currentassets of a business (in.cash, accounts

receivable,inventories) over current items owed to employeesand others (such as salarics&Wages
payable, accounts payable, tcs owned togovernment).
4.2. Concept Of Working Capital
Generally, there are two concepts of working capital i.e. gross concept and net concept.
1. Gross Concept Of Working Capital
According to gross concept, working capital refers to all the current assets and represents the amount
of funds invested in current assets. Thus, gross working capital is the capital invested in current
assets. Current assets are those assets which can be converted into cash within the short-time period.

Gross Working Capital = Total current assets
In this way, gross working capital refers to the firm's investment in current assets. Grossworking
capital represents total of currentassets which includes cash in hand, cash atbank, inventory, prepaid
expenses, billsreceivable etc.
2. Net Concept Of Working Capital
According to the net concept, working capitalis the excess of current assets over currentliabilities. In
other words, the differencebetween current assets and current liabilitiesis called net working capital.
Net Working Capital = Current Assets – Currentliabilities
In this way, net working capital is thedifference of current assets and currentliabilities.
4.3. Importance of working capital management
Working capital is a vital part of a business and can provide the following advantages to a
Business.
20  Higher return on capital A study on working capital management of TATA Steel Ltd
Firms with lower working capital will post ahigher return on capital. Therefore, shareholderswill
benefit from a higher return for every dollarinvested in the business.
 IMPROVED CREDIT PROFILE ANDSOLVENCY
The ability to meet short-term obligations is apre-requisite to long-term solvency. And it isoften a
good indication of counterparty creditrisk. Adequate working capital management willallow a
business to pay on time its short-termobligations. This could include payment for apurchase of raw
materials, payment of salaries, and other operating expenses.
 HIGHER PROFITABILITY
According to research conducted by Tauringanaand AdjapongAfrifa, the management ofaccount

payables and receivables is animportant driver of smallbusinesses'profitability.

 HIGHER LIQUIDITY
A large amount of cash can be tied up in workingcapital, so a company managing it efficientlycould

benefit from additional liquidity and beless dependent on external financing. This isespecially
important for smaller businesses asthey typically have limited access to externalfunding sources.
Also, small businesses oftenpay their bills in cash from earnings so efficientworking capital
management will allow abusiness to better allocate its resources andimprove their cash management.
 INCREASED BUSINESS VALUE
Firms with more efficient working capitalmanagement will generate more free cash flowswhich will
result in higher business valuation andenterprise value.
 FAVOURABLE FINANCING CONDITIONS
A firm with a good relationship with its tradepartners and paying its suppliers on time willbenefit
from favourable financing terms such asdiscount payments from its suppliers andbanking partners.
 UNINTERRUPTED PRODUCTION
21 A firm paying its suppliers on time will alsobenefit from

A study on a regular
working capitalflow of raw materials,ensuring
management of TATA Steel Ltd
that the production remainsuninterrupted and clients receive their goods ontime.
 ABILITY TO FACE SHOCKS AND PEAKDEMAND
Efficient working capital management will help afirm to survive through a crisis or ramp
upproduction in case of an unexpectedly large order.
 COMPETITIVE ADVANTAGE
Firms with an efficient supply chain will often beable to sell their products at a discount
versussimilar firms with inefficient sourcing.
4.4. Components associated with WCM:
Often the interrelationships among the workingcapital components create real challenges for
thefinancial manager. Inventory is purchased fromsuppliers, sale of which generates
accountsreceivable and collected in cash from customers topay off those suppliers. Working capital
has to bemanaged because the firm cannot always controlhow quickly the customers will buy, and

once theyhave made purchases, exactly when they will pay.That is why; controlling the "cash-to-
cash" cycleis paramount.
The different components of working capitalmanagement of any organization are:
A) Cash and Cashequivalents:
One of the most important working capitalcomponents to be managed by all organizations iscash and
cash equivalents. Cash managementhelps in determining the optimal size of the firm'sliquid asset
balance. It indicates the appropriatetypes and amounts of short-term investmentsalong with efficient
ways of controlling collectionand payout of cash. Good cash managementimplies the co-relation
between maintainingadequate liquidity with minimum cash in bank. All companies strongly
emphasize cashmanagement as it is the key to maintain the firm'scredit rating, minimize interest cost
and avoidinsolvency.
B) Management ofinventories:
Inventories include raw material, WIP (work inprogress) and finished goods. Where excessivestocks
can place a heavy burden on the cashresources of a business, insufficient stocks canresult in reduced
22 sales, delays for customers etc.Inventory management
A study oninvolves
workingthe control
capital ofassets that
management are Steel
of TATA produced
Ltd
to be sold in the normalcourse of business.
C) Management ofreceivables:
Receivables contribute to a significant portion ofthe current assets. For investments intoreceivables,
there are certain costs (opportunitycost and time value) that any company has tobear, along with the
risk of bad debts associated toit. It is, therefore necessary to have proper controland management of
receivables which helps intaking sound investment decisions in debtors.Thereby, for effective
receivables managementone needs to have control of the credits and makesure clear credit practices
are a part of thecompany policy, which is adopted by all othersassociated with the organization. One
has to bevigilant enough when accepting new accounts,especially larger ones. Thereby, the principle
liesin establishing appropriate credit limits for everycustomer and stick to them.

D) Management ofaccounts payable:
Creditors are a vital part of effective cashmanagement and have to be managed carefully toenhance
the cash position of the business. Onehas to keep in mind that purchasing initiates cashoutflows and
an undefined purchasing functioncan create liquidity problems for the company. The trade credit
terms are to be defined bycompanies as they vary across industries and alsoamong companies.
4.5. Time and money concept in WorkingCapital:
Every component of working capital (namely inventory, receivables and payables) has two
dimensions TIME and MONEY, in managing working capital. By making the money move faster
around the cycle, one can reduce the amount of money tied up. This helps the business generate more
cash or it will need to borrow less money to fund its working capital. Consequently, it would either
reduce the cost of interest or have free funds to support additional sales growth or investments of the
company. Similarly, if one can negotiate on better terms with suppliers i.e. get an increased credit
limit or longer credit; it will effectively create additional cash to help fund future sales.
23 4.6. Operating cycle of working capital

Working capital is also called acirculating capital or revolvingcapital. That is the

money/capitalwhich circulates in various formsof current assets in a continuedmanner. For example,
at a point oftime, funds may be tied up in rawmaterials, then later converted intosemi-finished
products, then intofinished/ final products and when these finished products are sold, itis converted
either into accountreceivables or cash.
This cash is reinvested in currentassets. Thus, the amount alwayskeeps on circulating or

revolvingfrom cash to current assets andback again to cash. That is whysome people prefer to use the
termliquidity management instead ofworking capital management. Although this circulation
takesplace at short intervals, the moneyis required again and again.
The American Institute of CertifiedPublic Accountants defined theoperating cycle as: "the
averagetime intervening between theacquisition of material or servicesentering the process and the
finalcash realisation.

5. RESEARCH METHODOLOGY
Research is a process in which the researchers wish to find out the end result for given problem
and thus the solution helps in future course of action. The research has been defined as “A careful
investigation or enquiry especially through search for new facts in branch of knowledge”.
According to Clifford Woody, research comprises defined and redefined problems

formulating hypothesis or suggested solutions, collecting, organizing and evaluating data, making
deductions and researching conclusions to determine whether they fit the formulated hypothesis.
Research methodology includes the process of systematic and objective search of information.
Secondary source of information sought from the website and annual reports of Bajaj Finserv
form a vital part of secondary data.
5.1 OBJECTIVES OF THE RESEARCH
• To draw conclusion and make recommendations for improvement on the

company’s working capital management where necessary
• To determine whether there is a relationship between profitability and
survival of the business.
• To determine whether there is any relationship between liquidity and survival
of the business.
To establish and evaluate the efficiency and effectiveness of working capital
management in the organization.
5.2 RESEARCH DESIGN

A research design is the set of methods and procedures used in collecting and analysing measures
of the variables specified in the research problem. It is the basic framework, which provides
guidelines for the rest of the research process. It specifies the method of data collection and
analysis. The success of their search depends on designing the research problem.
In this project study both descriptive as well as analytical research design were used. In analytical
research the researcher has to use facts or information already available and analyse these to make
a critical evaluation of the material. It involves the application of scientific

methods for the analysis of information to arrive at a solution for a specific problem of the
concern.
While the major purpose of descriptive research is the description of the state of affairs as it exists
at present.
The main characteristic of this type of research is that the researcher has no control over the
variables. He can only report what has happened or what is happening.
5.3 METHODS OF DATA COLLECTION
5.3.1 Primary data

Primary data are those collected by the researcher himself for the first time and thus they are original
in nature. Such data are collected with specific set objectives. But in this study the primary data
collection is not applicable.
5.3.2 Secondary data

Secondary data refers to the information or facts already collected. Such data are collected with
25 the objectives of understanding the past status of on
A study anyworking
variable datamanagement
capital collected and reported
of TATA Steel by
Ltd
some source is accessed and used for the objectives of the study. In this study the secondary data
are mainly collected from the annual reports of the company. The secondary data were collected
through:
Journals
Books
Company Website
Other websites

5.4 DATA ANALYSIS TECHNIQUE.
RATIO ANALYSIS
• Ratio analysis is a quantitative method of gaining insight into a company's liquidity,
operational efficiency, and profitability by comparing information contained in its
financial statements.
• Ratio analysis is a cornerstone of fundamental analysis. Outside analysts use several types
of ratios to assess companies, while corporate insiders rely on them less because of their
access to more detailed operational data about a company.
SCHEDULES FOR CHANGES OF WORKING CAPITAL
• Statement of changes in working capital (also known as schedule of change) is prepared

with view to providing information regarding the changes having taken place in each
individual item of ‘Current Assets’ and ‘Current Liabilities’ and the impact each of them
26 have on the ‘Working Capital’ (increase or decrease).

• The total of such increase or decrease is taken to ascertain the net result, which may
either be ‘Net Increase’ or ‘Net Decrease’ in ‘Working Capital’.
CORRELATION ANALYSIS
• Correlation analysis is a method of statistical evaluation used to study the strength of a
relationship between two, numerically measured, continuous variables. This particular
type of analysis is useful when a researcher wants to establish if there are possible
connections between variables.
• It is used to evaluate the strength of relationship between two quantitative variables. The
aim of this work is to provide a general overview of correlation analysis in order to
apply it to biomedical applications.

6. DATA ANALYSIS
6.1. Schedule of changes in working capital

Changes in working caitalis defined as the difference in the working capital from the current
year and the previous year.
Working capital = currentasset – current liabilities
schedule of changes in working capital

For the year 2014-2015
Table 6.1.1
Particulars Previous Current Effect on working capital
year year
2014 2015
(Cr) (cr) increase Decrease
A. Current
assets
Stock 6007.81 8042.00 2034.19
Debtors 770.81 491.46 279.35

Cash & bank 961.16 478.59 482.57
balance
Loans and advances 1481.58 1982.43 500.85
Total current 9221.36 10994.48

assets
B. Current
liabilities
Current liabilities 12869.80 10795.70 2074.1
Provision 1902.81 1675.41 227.4
Total current 14772.61 12471.11

liabilities
C.Working capital -5551.25 -1476.63 4836.54 761.92
D.Net decrease in 4074.62 4074.62

working capital
TOTAL 1476.63 1476.63 4836.54 4836.54
INTERPRETATION
The above table showing that the schedule of changes in workingcapital during 2014-2015
relating to the changes in current natured accounts between two periods. It shows that there is a

decrease in net working capital by Rs. 4074.62. also current assets and current liabilities has a
decrese from previous year.

Schedule of changes in working capital
Previous Current Effecton working capital

year year
Particulars Increase Decrease
2015 2016
(cr) (cr)
(cr) (cr)
A.current assets:
Stock 8042.00 7137.38 904.62
Debtors 491.46 1133.17 640.71
Cash & bank 478.59 1036.13 557.54
balance
Loans & 1982.43 1321.57 660.86

advances
Total current 10994.48 10628.25
assets
B. current
liabilities:
Provision 1675.41 1013.22 662.19
Total current 12471.11 13815.58

liabilities
C. working -1476.63 -3187.33 1860.44 3572.14
capital
D.Net decrease in 1710.7 1710.7
working capital
TOTAL -1476.63 -1476.63 3572.14 3572.14
Table 6.1.2
Interpretation
The above table showing that the schedule of changes in workingcapital during 2015-2016 relating to
the changes in current natured accounts between two periods. It shows that there is a decrease in net
working capital by Rs. 1710.7 also current assets and current liabilities has a decrese from previous
year.

Particulars Previous year Current year Effect on working capital

2016 2017
increase Decrease
A. Current
assets
Stock 7137.38 10236.85 3099.47
Debtors 1133.17 2006.52 873.35
Cash & bank 1036.13 970.31 65.82

balance
Loans and advances 1321.57 1586.91 265.34
Total current 10628.25 14800.59

assets
B. Current
liabilities
Provision 1013.22 1166.32 153.1

30
Total current 13815.58 19466.07

liabilities
C. Working -3187.33 -4665.48 4238.16 5716.31
capital
Net decrease in 1478.15 1478.15

working capital
Total 3187.33 3187.33
Table 6.1.2
INTERPRETATION
working capital by Rs. 1478.15 also current assets and current liabilities has a decrese from previous
year.

Particulars Previous year Current year Effect on working capital

2017 2018
Increase Decrease
A. current
assets
Stock 10236.85 11023.41 786.56
Debtors 2006.52 1875.63 130.89
Cash & bank 970.31 4696.74 3726.43

balance
Loans & advances 1586.91 2407.76 820.85
Total current 14800.59 20003.54

assets
B. current
liabilities
Provision 1166.32 1189.34 23.02
Total current 19466.07 22050.49

liabilities
C. working -4665.48 -2046.95 5333.84 2715.31
capital
Decrease in 2618.53 2618.53
working capital
TOTAL 4665.48 4665.48 5333.84 5333.84
Table 6.1.4
INTERPRETATION
working capital by Rs. 2618.53.

A. working -2046.95 -5985.26 1098.76 5037.07

Particulars
capital Previous Current Effect on working
Net decrease in year year
3938.31 capital
3938.31
working capital 2018 2019
TOTAL 5985.26 5985.26 5037.07
increase 5037.07
Decrease
B. current
assets
Stock 11023.41 11255.34 231.93
Debtors 1875.63 1363.04 512.59
Cash & bank 4696.74 718.11 3978.63

balance
Loan & advances 2407.76 3221.62 813.86
Total current 20003.54 16558.11

assets
C. current
32 liabilities A study on working capital management of TATA Steel Ltd
Provision 1189.34 1136.37 52.97
Total current 22050.49 22543.37

liabilities
Table 6.1.5
INTERPRETATION
The above table showing that the schedule of changes in workingcapital during 2018-2019 relating
to the changes in current natured accounts between two periods. It shows that there is a decrease in
net working capital by Rs. 3938.31.

6.2 RATIO ANALYSIS
Ratio analysis is defined as the as “the processing of computing, determining and presenting the
relationship of items and groups of items of financial statements with the help of ratios and
interpreting the result thereof.
6.2.1. LI QUIDITY RATIO S

Liquidity is the ability of the firm to meet its current liabilities as they fall due. Following are the
liquidity ratios used:
 CURRENT RATIO
CURRENT RATIO = CURRENT ASSET / CURRENT LIABILITIES
YEAR CURRENT CURRENT CURRENT

ASSET(cr) LIABILITIES(cr) RATIO
2014-2015 10994.48 12471.11 0.88:1
2015-2016 10628.25 13815.58 0.76:1
2016-2017 14800.59 19466.07 0.76:1

2017-2018 20003.54 22050.49 0.90:1
2018-2019 16558.11 22543.37 0.73:1
Table 6.2.1
current ratio
0.9
0.8
0.7
0.6 current ratio
0.5
0.4
0.3
0.2
0.1
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
FIG.6.2.1

INTERPRETATION
The current ratio of a firm measures its short term solvency i.e. its ability to meet short term
obligation. It is generally believed 2:1 ratio shows a comfortable working capital position. In the year
2014-2019 the ratio is less than 2 and it is not satisfactory. A high ratio indicates sound solvency
position and a low ratio indicates inadequate working capital.
QUICK RATIO:
This ratio is sometimes knows as acid test ratio or liquidity ratio. It is the relation between quick
asset and current liabilities.
QUICK RATIO = QUICK ASSET \ CURRENT LIABILITIES
YEAR QUICK ASSET CURRENT QUICK

LIABILITIES RATIO
2014-2015 969.57 12471.11 0.7:1
2015-2016 2169.3 13815.58 0.15:1
2016-2017 2976.83 19466.07 0.15:1

2017-2018 6572.37 22050.49 0.29:1
2018-2019 2081.15 22543.37 0.92:1
Table 6.2.2
QUICK RATIO
0.3
0.25
0.2 QUICK RATIO
0.15
0.1
0.05
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
FIG. 6.2.2

INTERPRETATION
In quick ratio of 1.1 is considered to be good for the organisation. From the analysis it is shown that
the firm is not maintaining quick ratio under any year of study.
 ABSOLUTE LIQUIDITY RATIO:
It is also known as cash position ratio. The ratio is obtained by dividing cash and marketable
securities by current liabilities.
ABSOLUTE LIQUIDITY RATIO = CASH + MARKETABLE SECURITIES/ CURRENT

LIABILITIES
YEAR ABSOLUTE CURRENT ABSOLUTE

LIQUIDITY LIABILITIES LIQUIDITY
RATIO RATIO
2014-2015 478.59 969.57 0.49:1
2015-2016 1036.13 2169.3 0.47:1
2016-2017 970.31 2976.83 0.32:1
35
2017-2018 4696.74 6572.37 0.71:1
2018-2019 718.11 2081.15 0.34:1
TABLE 6.2.3
ABSOLUTE LIQUIDITY RATIO

0.8
0.6
0.4 ABSOLUTE LIQUIDITY RATIO
0.2
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
FIG 6.2.3

INTERPRETATION
In absolute liquid ratio of 1:5 is considered to be good for the organisation. From the analysis it is
shown that the firm is not maintaining absolute liquid ratio under any year of study.
6.2.2. TURNOVER RATIO
 WORKING CAPITAL TURNOVER RATIO
This ratio reflects the turnover of the firms net working capital in the course of the year.
WORKING CAPITAL TURNOVER RATIO = NET SALES / NET WORKINGCAPITAL
YEAR COST OF SALES NET WORKING WORKING

CAPITAL CAPITAL
TURNOVER
RATIO
2014-2015 139503.73 -1476.63 -94.49
2015-2016 106339.92 -3187.33 -33.36
2016-2017 112299.42 -4665.48 -24.07
2017-2018 132155.75 -2846.95 -46.42
2018-2019 157668.99 -5985.26 -26.34
TABLE 6.2.4
workingcapital turnover ratio

2018-2019
2017-2018
workingcapital turnover ratio
2016-2017
2015-2016
2014-2015
-100 -90 -80 -70 -60 -50 -40 -30 -20 -10 0
FIG.6.2.4

INTERPRETATION:
The net working capital turnover ratio of each year is decreasing and is negative. It is a good
measure of over-trading and under-trading.
6.2.3. PROFITABILITY RATIO
A business firm is basically a profit earning organisation. The income statement of the firm shows
the profit earned by the firm during the accounting period. Profitability is an indication of the
efficiency with which the operations of the business are carried on.
The various types of profitability ratio involves:
NET PROFIT RATIO
NET PROFIT RATIO = NET PROFIT / NET SALES × 100
YEAR NET PROFIT NET SALES RATIO

2014-2015 -3955.50 139503.73 -2.83
2015-2016 -272.36 106339.92 -0.25
2016-2017 -4248.45 112299.42 -30.78
2017-2018 13260.23 132155.75 10.03
37 2018-2019 8873.63 157668.99
A study on working capital5.62
management of TATA Steel Ltd
Table 6.2.5
net profit ratio

net profit ratio
10.03
5.62
-0.25
2014-2015
-2.83 2015-2016 2016-2017 2017-2018 2018-2019
-30.78
FIG 6.2.5

INTERPRETATION:
This ratio is used to measure the overall profitability of the firm. Higher the ratio, better is the
operational efficiency of the concern. The net profitability ratio is negative in the year 2014-2016.
But it has increased from the year 2017-2018 onwards.
 OPERATING PROFIT
OPERATING PROFIT RATIO = OPERATING PROFIT / NET SALES ×100
YEAR OPERATING NET RATIO

PROFIT SALES
2014-2015 12535.75 139503.73 8.98
2015-2016 7968.33 106339.92 7.49
2016-2017 17007.82 112299.42 15.14
2017-2018 21890.53 132155.75 16.56
2018-2019 29383.34 157668.99 18.63

38 Table 6.2.6 A study on working capital management of TATA Steel Ltd
operating profit ratio

20
16
12
operating profit ratio
8
4
0
0 15 0 16 0 17 0 18 0 19
-2 -2 -2 -2 -2
14 15 16 17 18
20 20 20 20 20
FIG. 6.2.6

INTERPRETATION:
Here operating profit has decreased in the year 2015-2016, but has increased from the year 2016-
2017 onwards. when higher the operating profit ratio the less profitable are the operations indicating
that there is no efficient control over costs and an appropriate selling price.
6.2.4. RETURN ON TOTAL ASSETS
Profitability can be measured in terms of relationship between net profit and total assets. This is also
known as return on gross capital employed.
RETURN ON TOTAL ASSETS = NET PROFIT \ TOTAL ASSETS ×100
YEAR NET PROFIT TOTAL ASSET RATIO

2014-2015 -3955.50 97722.47 -4.04
2015-2016 -272.36 81281.66 -0.33
2016-2017 -4248.45 81620.07 -5.20
2017-2018 13260.23 93373.24 14.20
2018-2019 8873.63 102632.77 8.64
Table 6.2.7
return on total assets

return on total assets
14.2
8.64
-0.33
2014-2015 2015-2016 2016-2017 2017-2018 2019-2019
-4.04
-5.2
FIG.6.2.7

INTERPRETATION
Profitability can be measured in terms of relationship between net profit and total assets. Here is net
loss for the 2015, 2016 and 2017. The overall profitability of the firm can be known by applying this
ratio.
6.3.CORRELATION
Correlation is the degree to which the observed value of two or more random variables is
related. If two random variables are uncorrelated, the observed value of the second variable will not
be affected by the value of the first, and vice versa.
The Karl Pearson co-efficient of correlation can be calculated using the following formula:
n ∑ xy−∑ x ∑ y
r¿
√ n ∑ x ²−¿¿ ¿ ¿
YEAR X Y XY X² Y²
2014- -94.49 -4.04 381.7396 8928.36 16.3216

40 2015 A study on working capital management of TATA Steel Ltd
2015- -33.36 -0.33 11.0088 1112.89 0.1089
2016
2016- -24.07 -5.2 125.164 579.364 27.04
2017 9
2017- -46.42 14.2 -659.164 2154.81 201.64
2018 6
2018- -26.34 8.64 -227.578 693.795 74.6496
2019 6
TOTAL -224.68 13.27 -368.829 13469.2 319.7601
3
TABLE 6.3.1
(5 ×−368.829)−(−224.68 ×13.27)
2
=0.232
√ 5 ×13469.23−(−224.68 ) ×5 ×319.7601−(13.27) ²

Chart Title
80
60
40
20 return on total asset
0 working capital turnover
2015 2016 2017 2018 2019 #REF!
Axis Title -20
-40
-60
-80
-100
-120
FIG.6.3.1
INTERPRETATION:
The strength of the relationship varies in degree based on e value of the correlation coefficient. Here
the value obtained through the correlation analysis is 0.23 which means that there is a positive
41 correlation between two variables, but it is weak and likely
A study insignificant.
on working capital management of TATA Steel Ltd
7.1 FINDINGS

 Working capital of Tata steel ltd is negative as current asset is always lesser than that of
current liabilities.
 The schedule of changes in working capital show net decrease in working capital from the
year 2014-2015, 2015-2016, 2016-2017, 2017-2018, 2018-2019. The decrease in working
capital signifies that the company has to rely less on credit limit to be taken from the bank for
the purpose of meeting it’s working capital management.
 The net sales of the company has decreased in the year 2015-2016 but it has increased from
the next year onwards.
 Tata steel ltd has not effectively employed their working capital in making sales. It does not
show better management of working capital and the efficiency with which working capital is
employed
 From the analysis it is clear that the firm is not satisfying it’s current ratio in any of the year.
 It is also clear from the analysis that the firm is also not satisfying the quick Ratio in any of
the year also the firm is also not satisfying absolute Liquidity Ratio of any year of any year.
 Net profit is negative in the year 2014-2015, 2015-2016 and 2016-2017 and it increases from
the year 2017-2018, 2018-2019. Higher the Ratio, better is the operational efficiency of the
42 concern. A study on working capital management of TATA Steel Ltd

 Return on total asset can be used to measure the overall profitability of the firm. Here the
ratio more favourable more will be the outcome and vice-versa. The analysis shows that
return on total Asset ratio is negative in the year 2015-2016 and has started to increase from
2017.
 Correlation between working capital turnover and return on total Assets is done and ith was
found that the value obtained through the correlation analysis is 0.23 which means that there
is a positive correlation between two variables, but it is weak and likely insignificant.
8.1 RECOMMENDATIONS

 . The decrease in working capital signifies that the company has to rely less on credit limit to
be taken from the bank for the purpose of meeting it’s working capital management.
 In order to improve the current ratio of the firm has to follow various measures such as delay
any capital purchases that would require any cash payments, Looking to see if any term loans
can be amortized. Reducing the personal draw on the business, Selling any capital assets that
are not generating a return to the business (use cash to reduce current debt).
 Company should raise funds through short term sources for short term requirements, which
comparatively economical compare to long term funds.
 Company has to take control on cash balance because cash is non earning asset and increase
cost of funds.
 The company should keep sufficient cash or bank in order to meet its current liability
immediately otherwise it will adversely affect the liquidity position of the company.
 In order to improve the return on total Asset of the firm Productivity has to be increased
which can result in a lower production cost per unit and an increase in gross margin that will
fall to the bottom-line profit. The higher profit may cause return on total assets to increase,
even if the new equipment increases the total asset base somewhat.
43  As the working capital of the firm is showing

A study a decrease
on working capitaltrend , the firm
management has Steel
of TATA to adopt
Ltd
measures to increase the working capital. It includes Collecting payments from customers
faster is an obvious route to keeping more working capital in your company. better of using
long-term loans to pay for fixed assets," When business owners use up all of their cash, they
also look more risky to financial institutions.
9.1 CONCLUSION

In a manufacturing industry the working capital analysis is essential for its smooth functions. The
working capital management means managing the Current Assets and Current Liabilities of an
industry. The present project has been undertaken to examine the practices working capital
management of TATA STEEL LIMITED. and to assess whether the industry has Achieved adequate
amount of working capital for its smooth functioning and to understand It’s profitability.
The major objectives of the studies were to analyse the working capital of TATA STEEL LTD ,
Study the efficiency of working capital management of the company and to measure the overall
financial position of the organization with the help of tools such as schedule of changes in working
capital, ratio analysis and correlation analysis.
The methodology, that has been adopted for the study includes the various tools which basically
analyse critically the financial position of the organization like schedule of changes in working
capital ratio analysis. Correlation. based on the primary data collected from the company and
secondary data collected from balance sheet and annual report of the company, magazines, book of
accounts other books web sites etc. In order to analyse the working capital, Liquidity Ratios,
Turnover Ratios and Profitability Ratios were worked out. Based on the analysis it was found that
working capital of TATA STEEL LTD is not satisfying as current asset of TATA STEEL LTD is
always lesser than that of current liabilities.
REFERENCES

BOOKS:
 IM PANDEY, Financial Management, Financial Management 10" Edition, UBS Publishers

and Distributors (2014).
 Kothari C.R, Research Methodology, 5 revised edition, New Age International Publishers
Ltd, New Delhi. (2012).
 Shukla M C, Grewal T S, Gupta S C, Advanced Accounts Vo 1 Revised Edition 2013, S
Chand and Co Pvt Ltd, New Delhi (2013).
 Rodger Oldcorn, Company Accounts, Third edition, MacMillan Press Ltd, London(1996).
JOURNALS
 R. Saikalu and Dr. K.P. Balakrishnan 2015. Comparative financial performance about Tata
steel and steel companies. International Journal of Advanced Multidisciplinary Research
(IJAMR).
 P Singh, J & Pandey, Shishir (2008) Impact of Working Capital Management in the
Profitability of Hindalco Industries Limited. The IUP Journal of Financial Economics, VI,
45 62-72. A study on working capital management of TATA Steel Ltd
 Ching, Hong & Novazzi, Ayrton & Gerab, Fábio. (2011). Relationship between working
capital management and profitability in Brazilian listed companies. journal of global Business
and Economics. 3. 74-86.
 T. Velnampy, B. Nimalathasan (2008) An association between organizational growth and
profitability A study of commercial bank of Ceylon LTD Sri Lanka / Annals of University of
Bucharest, Economic and Administrative Series.
 Mr. N.Suresh Babu .prof. G.V.Chalam. Study on the Working Capital Management
Efficiency in Indium Leather Industry. An Empirical Analysis International Journal of
Research in Management & Technology (Paper).
 Daniel Mogaka Makari and Ambrose Japonga Working Capital Management and Firm
Profitability: Empirical Evidence from Manufacturing and Construction Firms Listed on
Naimi Securities Exchange. Kenya International Journal of Accounting and taxation.
REPORT
 Annual Report from the Tata steel ltd during the year 2014-2015 to 2018-2019.

WEBSITE
 http://www.investopedia.com/terms.html
 http://www.studyfinance.com lessons.
 www.tatasteelltd.com
 www.wikipedia.com

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1.

1 BACKGROUND OF THE STUDY

1 working capital management plays a very important

Mount Zion School of Business Management, Kadammanitta

2 A study on working capital management of TATA Steel Ltd

1.3. NEED AND SIGNIFICANCE OF THE STUDY

1.4. SCOPE OF THE STUDY

Mount Zion School of Business Management, Kadammanitta

The main objective of the study is:

 To study the working capital management of the company.

Secondary objectives are:

 To study the concept and importance of working capital management.

1.6 LIMITATIONS OF STUDY

Mount Zion School of Business Management, Kadammanitta

4 Another head is objectives of the study. Here the major

Chapter 3: LITERATURE REVIEW

Chapter 4: THEORETICAL FRAMEWORK

Mount Zion School of Business Management, Kadammanitta

Chapter 6: DATA ANALYSIS

5 Chapter 9: CONCLUSION A study on working capital management of TATA Steel Ltd

Mount Zion School of Business Management, Kadammanitta

6 GLOBAL SCENARIO A study on working capital management of TATA Steel Ltd

Mount Zion School of Business Management, Kadammanitta

Commentingon the outlook, Mr Al Remeithi,Chairman of the world steelEconomicsCommittee said,

Mount Zion School of Business Management, Kadammanitta

Recent excavations in the Middle Ganges Valleyconducted by archaeologistRakesh Reddy with

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

Steel Manufacturers Association of Kerala:

11 Brought together all manufacturers of Kerala Secondary

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

In September 2017, ThyssenKrupp of Germany andTata Steel announced plans to combine

ACQUISITIONS OF TATA STEEL LTD

Millennium Steel in 2005:

Core steel in 2007:

Mount Zion School of Business Management, Kadammanitta

Steel Engineering and Vinausteel in 2007:

Bhushan Steel in 2018:

Mount Zion School of Business Management, Kadammanitta

(Corporate & Compliance)

T. V. Narendran - Chief Executive Officer andManaging Director

V.K. Sharma - Non-Executive Director

Peter Blauwhoff - Independent Director

Deepak Kapoor - Independent Director

Saurabh Agrawal- Non-Executive Director

Koushik Chatterjee- Executive Director and Chief Financial Officer

Aman Mehta. - Independent Director

N. Chandrasekaran - Chairman of the Board andNon-Executive Director

Mallika Srinivasan - Independent Director

15 A study on working capital management of TATA Steel Ltd

VISION& MISSION OF THE COMPANY

Mount Zion School of Business Management, Kadammanitta

PRODUCTS AND SERVICES

Mount Zion School of Business Management, Kadammanitta

Mount Zion School of Business Management, Kadammanitta

 MAYNARD E REFUSE (1996) argued that attempt to improve working capital by