Tata Steel's Vision for sustainable growth is to aspire to be a global steel industry benchmark in Value Creation and Corporate Citizenship. It accelerated economic value creation during 2010-11 by achieving the best ever EBITDA of Rs.12,224 crores sharpening its focus on the quality of its earnings and continuing to pursue its growth goals.
Growing responsibly and strengthening our position
Tata Steel is aggressively pursuing its growth plans to meet the needs of a rapidly expanding Indian steel market. Its 2.9 MTPA project at Jamshedpur, scheduled for completion in FY 2011-12, will take its crude steel capacity from 6.8 MTPA to 9.7 MTPA.
Construction on Tata Steel's greenfield project at Kalinganagar in Odisha, to be developed in two 3MT phases, progressed as anticipated during the year. The Company has executed contracts for the construction of the iron and steel making facilities and the slab caster. The first phase of the project is scheduled to be commissioned in 2014.
Increasing the share of value added products in the portfolio
The Company's focus on producing cost competitive steel, new product development and due date delivery performance through use of TQM methodologies like KVHS, TOC, PSTA, ASPIRE, CVM, RVM etc enhanced its market leadership position in all segments, giving it a 41% market share in the automotive sector and 8% market share in Construction. Tata Steel earned EBITDA margins of 41.6% in 2010-11, making it one of the most profitable steel operations in the world.
The Company's robust operating performance, improved product mix and higher realizations led to its best ever turnover of Rs.29,396 Crs, highest ever Profit after Tax of Rs.6,866 Crs and EBITDA of Rs.12,224 Crs, thereby allowing it to stretch towards its goal of meeting future growth needs from internal accruals.
To improve its automotive offering in India, a focus area for growth, Tata Steel entered into a joint venture agreement with Nippon Steel during the reporting year to set up India's first Continuous Annealing and Processing Line (CAPL) at Jamshedpur. It will produce 600,000 tonnes per annum of automotive cold rolled steel. The project is expected to come on stream in 2013.
The current reporting year also took Tata Steel’s contribution towards society to 1.8% of its PAT, amounting to a total of Rs 126 Crs spent in promoting the development of municipal, community and medical services, rural activities and other initiatives in 2010-11 as against Rs. 102 Crs in 2009-10. The Company also introduced a market based new wage for its employees. The indirect economic impact of its activities was demonstrated by the indirect employment provided by the Company's contractors to a workforce larger than that of Tata Steel.
Investor Value Creation
The Board of Directors of the Company recommended a dividend @ 120% (Rs. 12 per share) for the year ended 31st March 2011. The dividend cash-outgo (including tax on dividend) was Rs. 1308 Crs. The dividend payout as a percent of Net Profit was19%.
Total number of shareholders as on 31.03.11 were 969,987 (809,821 as on 31.03.10), Basic Earnings per share of Rs.75.6 (FY10 Rs.60.3), Diluted Earnings Per Share of Rs.70.9 (FY10 Rs.57.3), Networth Per Share as at year end of Rs.534 (increase of 19% as on 31.03.10 Rs.449) and Dividend of 120% further augmented value for the investor.
The Company focused on managing the capital structure effectively and to undertake financing based on the Company's funding requirements for growth.
Customer Value Creation
Sales of branded products and sales to the automotive sector both exceeded 1 MTPA in 2010-11, with the Company recording best ever Skin Panel & Galvanized Annealed product sales. Due date performance improved significantly from 93% to 96% in flat products and from 87% to 91% in long products.
The Company continued to foster a culture of innovation and continuous improvements which resulted in the development of new products.