PROJECT REPORT

(Submitted for the Degree of B.Com Honours in Accounting & Finance

under the University Of Calcutta)

Title of the Project

MERGER & ACQUISITIONS ON TATA STEEL

LTD. & CORUS.

Submitted by
Name of the Candidate: PANKAJ AGARWAL
Registration No.: 017-1121-2011-12
Name of the College: SHYAMAPRASAD COLLEGE
College Roll No.: 301-171

Supervised by
Name of the Supervisor: NILOY GAUTAM
Name of the College: SHYAMAPRASAD COLLEGE

Month & Year of Submission - February, 2015

Annexure- IA
Supervisor's Certificate

This is to certify that Mr. PANKAJ AGARWAL a student of B.Com. Honours in

Accounting & Finance of SHYAMAPRASAD COLLEGE under the University
of Calcutta has worked under my supervision and guidance for his Project Work
and prepared a Project Report with the title MERGER AND ACQUISITIONS
ON TATA STEEL LTD. & CORUS.

The project report which he has submitted is his genuine and original work to the
best of my knowledge.

Place: Kolkata Name: Niloy Gautam

Date: Designation:
Name of the College: Shyamaprasad
College

2
Annexure- IB

Student’s Declaration

I hereby declare that the Project Work with the title “MERGER AND
ACQUISITIONS ON TATA STEEL LTD. & CORUS.”
Submitted by me for the partial fulfillment of the degree of B.com Honours in
Accounting and Finance under the University of Calcutta is my original work and
has not been submitted earlier to any other University/ Institution for the
fulfillment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or me. However,
extracts of any literature which has been used for this report has been duly
acknowledgement providing details of such literature in the references.

Place: Kolkata Signature

Date: Name: Pankaj Agarwal
Registration No.: 017-1121-2011-12

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 Acknowledgement

This report is an outstanding prospect to convey my gratefulness to those many

people whose timely help and guidance went a long way in finishing this project
work from commencement to achievement. I would like to express my sincere
thanks to PROF. NILOY GAUTAM.

This project could not be completed without the guidance and support of our
Professor last but not list would like to thanks my friends, family members and all
those peoples helped me for the completion and deeper understanding of the
concept of performance appraisal working on this project to be an enlightening
experience for me.

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 Table of Contents

Chapter Title Page No.

Introduction
Background 6
Rationale/Need
1 7
Objective of Study
Literature Review
8
Chapter Planning
Conceptual Framework/ National And International Scenario
Definition of Merger & Acquisition 9
2
Types of Merger & Acquisitions 10
Advantages & Disadvantages 11
Data Presentation, Analysis & Findings
Objectives 12
3
Methodology 12-14
Analysis of Findings 14-20
Summary and Conclusion
Observation 21
4
Conclusion
22
Limitations
5 References 23
Annexure
Tata Steel Comparative Analysis 24
Tata Steel Ltd. Balance sheet as on 31.03.2006 25
6
Tata Steel Ltd. P/L A/c for the year ended 31.03.2006 26
Tata Steel Ltd. Balance sheet as on 31.03.2012 27
Tata Steel Ltd. P/L A/c for the year ended 31.03.2012 28

5
 CHAPTER 1
INTRODUCTION

1.1 Background:
Mergers and acquisitions are a topic of great debate in today’s world. Some proponents argue
that mergers increase efficiency and could be a strategy for consolidation in the case of corporate
distress whereas opponents argue that they decrease consumer welfare by monopoly power.

Mergers and acquisitions is an aspect of corporate strategy, corporate finance and management
dealing with the buying, selling, dividing and combining of different companies and similar
entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field
or new location, without creating a subsidiary, other child entity or using a joint venture. The
distinction between a "merger" and an "acquisition" has become increasingly blurred in various
respects (particularly in terms of the ultimate economic outcome), although it has not completely
disappeared in all situations

During the most recent mergers and acquisitions boom periods, managers and investors spent
much time in mergers and acquisitions transactions every day which can be worth hundreds of
millions or even billions of dollars. For instance in January 2000, the mergers and acquisitions
between Time Warner and AOL (American On Line) broke a record of $181 billions of stock.
Therefore, not surprisingly, these transactions make the news always. Unfortunately according to
the survey of the researchers, in many CEO’s opinion, only 37% of mergers and acquisitions
activities are considered to be very successful or somewhat successful.

6
1.2 Rationale/Need:
Every merger has its own unique reasons why the combining of two companies is a good
business decision. The underlying principle behind merger and acquisition is simple .the joining
or merging of the two companies creates additional value which we called synergy value.

Synergy value takes three forms:

 Revenue: By combining the two companies, we will realize higher revenues then
if the two companies operate separately.

 Expenses: By combining the two companies, we will realize lower expenses then
if the two companies operate separately.

 Cost of capital : By combining the two companies, we will realize the lower cost
of capital

For the most part, the biggest source of synergy value is lower expenses. Many mergers are driven by
the need to cut costs. Cost savings often come from the elimination of redundant services, such as
Human Resources, Accounting, Information Technology, etc. However, the best mergers seem to
have strategic reasons for the business combination.

Positioning is considered as the important strategic reason taking advantage of future opportunities
that can be exploited when the two companies are combined. For example, a telecommunications
company might improve its position for the future if it were to own a broad band service company.
Companies need to position themselves to take advantage of emerging trends in the marketplace.

1.3 Objectives of the study:

This study focuses on the following objectives:

 To identify the motive behind corporate mergers and acquisitions.

 An examination of mergers and acquisitions as a survival strategy.

 To evaluate the mergers and acquisitions option strategies to salvage corporate distress.

 To identify the factors which may cause merger and acquisition failure.

7
1.4 Literature Review:

 Merger (or an amalgamation) occurs when two or more companies transfer their
businesses and assets to a new company (or to one of themselves) and in consideration, their
members receive shares in the transferee company. It is meant that an acquisition occurs when
one company acquires sufficient shares in another company so as to give it control of that other
company..

 An acquisition could be explained as an event where a company takes a controlling

ownership interest in another firm a legal subsidiary of another firm or selected aspects of
another firm. This may involve the purchase of another firm’s assets or stock (Donald M
DePamphilis, 2008). Acquiring all the assets of the selling firm will avoid the potential problem
of having minority shareholders as opposed to acquisition of stock. However the costs involved
in transferring the assets are generally very high. A large portion of the empirical work
examining the benefits of mergers focuses on changes in cost efficiency using available
accounting data. Berger and Humphrey (1992), found that, on average, mergers led to no
significant gains in X-efficiency. Berger and Humphrey also conclude that the amount of market
overlap and the difference between acquirer and target X-efficiency did not affect post-merger
efficiency gains. In addition to testing X-efficiency, they also analyze return on assets and total
costs to assets and reach a similar conclusion: no average gains and no relation between gains
and the relative performance of acquirers and targets.

 In summary, most studies fail to find a positive relationship between merger activity and
gains in either performance or stockholder wealth. This conclusion of no economic benefits
holds across a wide variety of methodologies, samples, and levels of analysis.

1.5 Chapter Planning:

In order to serve our purpose in Chapter 1 we have discussed the basic outline that this study
will follow, Chapter 2 transforms into explaining the conceptual frameworks with its elite facts.
In Chapter 3 we concentrate on data presentation and analysis findings that finally lead to,
Chapter 4 where we disclosed our conclusion & recommendations

8
 CHAPTER 2
CONCEPTUAL FRAMEWORK

2.1 Definition of Mergers & Acquisition: -

Different economic rationality hypotheses exist, but the central theme is that the merger and
acquisition strategy aims at creating value for the shareholders. This value creation is sometimes
labeled synergy. Generally, synergy exists when the total effect is greater than the sum of the
effects taken independently. Or put differently, synergy exists when two plus two adds up to five.
This general definition has also been translated to the diversification literature whereby synergy
indicates that a corporate portfolio of businesses is worth more than its businesses would be
worth as stand-alone entities (Campbell and Lucks, 1992). The same authors also argued that
synergy can cover other situations, for instance synergy can be created in horizontal mergers (i.e.
mergers between competitors within the same industry). For the purpose of this study, however,
we focus on synergies due to diversification strategies.

In many articles synergy is considered as one of the main rationales for merger and acquisition.
Only few attempts have been made to link the type of synergy to the amount of economic value
created. Most research starts from a classification of related versus unrelated merger, but the
problem with this scheme is that it lumps together the different economic benefits and treats
them as synonymous.

The major theories that indicate the sources of synergy that would be discussed in this study
include:
1.The Efficiency Hypothesis;

9
2. The Market Power View, and
3. The Financial Synergy Hypothesis.

2.2 Types of Merger & Acquisition:

There are many types of mergers and acquisitions that redefine the business world with new
strategic alliances and improved corporate philosophies. From the business structure perspective,
some of the most common and significant types of mergers and acquisitions are listed below: 

Horizontal Merger 
This kind of merger exists between two companies who compete in the same industry segment.
The two companies combine their operations and gains strength in terms of improved
performance, increased capital, and enhanced profits. This kind substantially reduces the number
of competitors in the segment and gives a higher edge over competition. 

Vertical Merger 
Vertical merger is a kind in which two or more companies in the same industry but in different
fields combine together in business. In this form, the companies in merger decide to combine all
the operations and productions under one shelter. It is like encompassing all the requirements
and products of a single industry segment. 

Co-Generic Merger
Co-generic merger is a kind in which two or more companies in association are some way or the
other related to the production processes, business markets, or basic required technologies. It
includes the extension of the product line or acquiring components that are all the way required
in the daily operations. This kind offers great opportunities to businesses as it opens a hue
gateway to diversify around a common set of resources and strategic requirements. 

Conglomerate Merger
Conglomerate merger is a kind of venture in which two or more companies belonging to
different industrial sectors combine their operations. All the merged companies are no way
related to their kind of business and product line rather their operations overlap that of each

10
other. This is just a unification of businesses from different verticals under one flagship
enterprise or firm. 

2.3Advantages and Disadvantages of Mergers and Acquisitions

Advantages and disadvantages of mergers and acquisitions (M&A) are determined by the short-
term and long-term company strategic outlook of the new and acquiring companies. This is due
to a host of factors including market conditions, differences in business culture, acquisition costs
and changes to financial strength surrounding the corporate takeover.

A well known example of mergers gone bad was the September 15, 2008 merger between Bank
of America and Merrill Lynch. This merger was surrounded by complications ranging from
employee bonuses, added debt and forced hands as evident in the April 13, 2009 U.S. Senate
Committee on Banking investigation of the merger.

In the case where short-term financial benefits are not realized, long-term advantages may be
seen as a valid and probable reason for the merger or acquisition.

2.3.1 Advantages of Mergers are: -

• Increased market share

• Lower cost of operation and/or production
• Higher competitiveness
• Industry know how and positioning
• Financial leverage
• Improved profitability and EPS

2.3.2 Disadvantages of Mergers are: -

• Increase in cost to consumers

• Decreased corporate performance and/or services
• potentially lowered industry innovation
• Suppression of competing businesses
• Decline in equity pricing and investment value

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 CHAPTER 3
DATA PRESENTATION, ANALYSIS &
FINDINGS

3.1 Objectives:

This study focuses on the following objectives:

 To identify the motive behind corporate mergers and acquisitions.

 An examination of mergers and acquisitions as a survival strategy.

 To critically evaluate the mergers and acquisitions option as a strategy to salvage

corporate distress.
 To identify the factors which may cause merger and acquisition failure

3.2 Methodology:

I have used secondary source of data for analyzing the Merger & Acquisition of TATA Steel
Limited & Corus Plc.

3.2.1 Area of Study:

The major research methodology of this dissertation is quantitative approach – an accounting

study. The relevant data is mainly collected from company’s annual reports as well as online and
printed publications such as research papers and articles. Specifically speaking an accounting
study is used to measure the changes of firm’s financial performance before and after mergers

12
and acquisitions and to see how M&A affect the company’s financial performance. This process
involves the calculation of the key ratios including the revenue/turnover growth rates, key
profitability ratios liquidity ratios and activity ratio. Lastly in order to control firm’s specific,
company’s financial performance, the comparison among the acquiring company and its non-
acquiring peers in the same industry during the same period will be examined.

3.2.2 Data Type:

The secondary source of data is used for analyzing the effect of Merger & Acquisition of TATA
Steel Limited & Corus Plc. The study will be made with suitable, simple statistical tools,
accounting ratios and tools to come to a logical conclusion.

3.2.3 Data Source:

Secondary sources of data are used. The study has been made by collection of data from annual
report of the company of the said period and other relevant publication made in news papers &
magazines.

3.2.4 Period of Study:

The period of study of the project is 2004-05, 2005-06, 2010-11 & 2011-12

3.2.5 Sample Size:

My project work is based on TATA Steels & Corus Plc. And the sample size of my project is
limited to this.

Brief History of TATA Steel:

TATA Steel was established by Parsi Businessman Jamshedji Tata in 1907, exactly in the year
when British American Tobacco has first started its operation in India. It started operating in the
year 1912. Tata Steel holds a very vital place in the Indian business, because it has introduced some
of the unique concept. From Tata Steel, Tata has started investing in various other businesses like
oil mills, airlines, Tata motors, consultancy services etc in the short span of 30years. In the year
1945 Tata entered into Tea business by the name of Tata Tea, which was called as Tata Finlay

13
earlier. Tata also entered into exports as Tata Exports which is the most successful and the largest
export house in India. India’s major market for steel and steel items include USA, Canada,
Indonesia, Italy, West Asia, Nepal, Taiwan, Thailand , Srilanka and Belgium. The major steel items
of export includes HR coils, plates, CR and galvanized products, pipes, stainless steels and wires.

Brief History of Corus Group Plc:

Corus Group Inc was formed on 6th October 1999 through the merger of two companies British
Koninklijke Hoogovens, following the privatization of many steel works companies by UK
government. The company consists of four divisions which include strip products, long products,
aluminum and distribution and building systems. With headquarters in London Corus operates as an
international company satisfying the demand of many steel customers worldwide. Its core business
comprises of manufacturing, allocation of steel and aluminum products and services. In terms of
performance the company is regarded as the largest steel producer in UK with Pound 10142
millions of annual revenue for 2005 an d a workforce of 50000 employees. In order to sustain and
run its global steel making the company makes an annual investment of over pound 6 million for the
purchase of various goods and services such as iron ore and coal, alloys, refractory, rolls and paints.

3.2.6 Tools Used:

Various ratios such as Current ratio, Debt – Equity Ratio, Net Profit margin, Operating Profit
margin, Return on capital employed, Return on net worth & EPS and graphs are used for
analyzing the merger & Acquisition of TATA Steels & Corus Plc.

3.3 Analysis of Findings:

Ratio Analysis: -

LIQUIDITY RATIO:
A class of financial metrics that is used to determine a company’s ability to pay off its short
terms debts obligations. Generally the higher value of the ratio, the margin of safety that the
company possesses to cover short term debts.

Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow
ratio. Different analysis considers different assets to be relevant in calculating liquidity. Some

14
analysis will calculate only the sum of cash and equivalents divided by current liabilities because
they feel that they are the most liquid assets, and would be the most likely to be used to cover
short term debts in an emergency. The common liquidity ratios are:

1. Current Ratio:

This ratio is an indicator of the firm’s commitment to meet short term liabilities. The current
ratio is the ratio of current assets and current liabilities.

Formula: Current Ratio = Current Assets / Current Liabilities

Standard Ratio: 2:1

PRE MERGER POST MERGER

Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 1.10 1.11 1.63 0.96

Findings:

Pre-merger, we see that current ratio is comparatively better than that after merger. Post merger the
current ratio decreases which is not good for the health of the company.

2. DEBT – EQUITY RATIO:

The ratio expresses the relationship between debt capital and shareholders fund of the company.

Formula: Debt-Equity ratio: Long Term Debt / Shareholder’s Fund

15
 PRE MERGER POST MERGER
Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 0.54 0.29 0.49 0.41

Findings:

Pre-merger, we see that debt equity ratio is low which indicates a low risk as well as less dependency
on external lenders but after the merger takes place it increases in 2010 but again becomes low in
2011 and 2012.

PROFITABILITY RATIO:
The term profitability means the earning capability of a firm. It acts as a yardstick to measure the
operating efficiency of the firm. Thus, profitability ratios are those which measure the ability of a
firm to generate revenue in excess of expenses. These ratios indicate the operating efficiency of
the firm and also reflect the ultimate effect of various policies and decisions adopted by it.
Various profitability Ratios are:

1. Net Profit Margin:

Net profit margin measures how much out of every dollar of sales a company actually keeps in
earnings.

Formula: Net Profit Margin = Net Profit / Net Sales

PRE MERGER POST MERGER

Companies 2004-05 2005-06 2010-11 2011-12
16
TATA STEEL LTD 23.98% 23.17% 23.43% 19.79%

Findings:

Pre-merger, we see that the net profit margin of the company is high but it starts declining after the
merger takes place. There is a sharp decline in the net profit margin post-merger. It increases in 2011
but again starts declining in 2012

2. Operating Profit Margin:

A ratio used to measure a company's pricing strategy and operating efficiency.

Formula: Operating Margin = Operating Income / Net Sales

PRE MERGER POST MERGER
Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 41.11% 38.89% 38.11% 35.50%

Findings:

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Pre-merger, we see that the operating profit margin of the company is high but it starts declining after
the merger takes place.

3. Return on capital employed:

It is a ratio that indicates the efficiency and profitability of a company's capital investments.

Formula: Return on capital employed: EBIT / Capital Employed

PRE MERGER POST MERGER

Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 61.89% 50.01% 16.43% 17.04%

Findings:

Pre-merger, we see that the return on capital employed of the company is very high but it starts
declining after the merger takes place. There is an increase in the return on capital employed post-
merger. It sharply decreases in 2009 but again starts increasing in 2012.

4. Return on Net worth:

Return on net worth describes the portion of net income that is eventually returned as a

percentage of the equity held by shareholders in a company. The amount by which assets exceed
liabilities is known as the net worth.

Formula: Return on net worth = Net profit / Net Worth

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 PRE MERGER POST MERGER
Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 49.21% 35.94% 14.17% 12.82%

Findings:

Pre-merger, we see that the return on net worth of the company is very high but it starts declining
after the merger takes place. There is a sharp decline in the return on net worth post-merger.

5. Earnings per Share:

The EPS is calculated by dividing net profit after taxes and preference dividends by the number
of outstanding equity shares.
Formula: Earnings per Share = (Profit after tax – preference dividend)/Total no. of equity
shares

PRE MERGER POST MERGER

Companies 2004-05 2005-06 2010-11 2011-12
TATA STEEL LTD 62.77 63.35 71.58 68.95

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Findings:

Pre-merger, we see that the earnings per share has an increasing trend but after the merger takes
place the earnings decline sharply in 2009 but sharply increases in 2010 but again starts declining..

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 CHAPTER 4
SUMMARY & CONCLUSION
4.1 Observation: -
For Tata Steel, we see that, after the merger takes place in 2007

 The operating profit margin increases from 41.11% to 38.89%. It keeps fluctuating from
2009-2012. By 2012 it comes to 35.50%. Before the merger took place, the operating
profit margin was high and reached its highest in 2005 at 41.11%. Even after the merger
had taken place the company did not show much difference in the rates of the operating
profit margin. It roughly exhibited the same pattern before and after the merger. This
indicates that neither the performance of the company improved nor did it worsen.

 Net profit margin shows a decline from 23.98% to 23.17% and keeps declining and by
2012 comes down to 19.79%. Even after the merger had taken place the company did not
show much difference in the rates of the net profit margin. It roughly exhibited the same
pattern before and after the merger. This indicates that neither the performance of the
company improved nor did it worsen.

 Return on capital employed declines from 61.89% to 50.01% but starts declining from
2009 and keeps declining till 2012. Return on net worth falls from 29.95% to 17.17% and
keeps declining till 2012. Before the merger had taken place the return on capital
employed and return on net worth were higher compared to the return after the merger. In
2005, return on capital employed was as high as 61.89%; such a rate is not witnessed
after the merger. In 2005, return on net worth was as high as 49.21%; the company is yet
to achieve such a high rate. This indicates that after the merger took place the
performance of the company declined.

 The debt equity ratio decreases from 0.54 to 0.29. This decrease was too sharp and
indicated a low level of risk for investors. It started increasing in 2009 and in 2012 it
came down up to 0.41, which indicated a very high level of risk for investors. Since the
debt equity ratio remained fairly low before the merger had taken place the level of risk
for investors to invest in the company was also fairly low.

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  Earnings per share declined from Rs 62.27 to Rs 63.35. It increased in 2009 but in 2010 it
again declined. It again increased in 2011 but was followed by a decrease in 2012. The
earnings per share did not show much change pre-merger and post-merger. This indicates
that the shareholders kept receiving similar amounts of dividend with little fluctuations
over the years.

4.2 Conclusion: -

Mergers have been the prime reason by which companies around the world have been growing.
The inorganic route has been adopted by companies forced by immense competition need to enter
new markets, saturation in domestic markets, thrust to grow big and maximize profit for
shareholders. In the changing market scenario it has become very important for firms to maximize
wealth for shareholders. The Hubris hypothesis in fact states that the announcement of a merger
or an acquisition does not lead to return for shareholders since the acquisitions would only lead
transfer of the wealth from the bidding shareholders to the target shareholders.

A number of studies have been done in various countries in the world to find out whether mergers
and acquisitions create maximization of wealth for shareholders. The study shows that the
acquiring firm was not able to create enough wealth for shareholders post acquisition.

To conclude mergers and acquisitions do not create immediate shareholders wealth and margins
for the acquiring firm in the immediate short term. However from a longer perspective a
consolidated company would be able to better cope up with the competition, increased pressure to
cut cost and grow in the changing business environment.

4.3 Limitations:

 Past details are not necessarily true indicators of the future.

 The analysis & interpretations are based on secondary data taken from financial report
 Ratio will not completely show the companies good or bad financial position.
 The figures from the financial statement were historical in nature and time value of
money is not considered.

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  The data provided in this study are for limited period of time i.e. 2004-06 & 2010-2012

CHAPTER 5
REFERENCES

Bibliography

1. Internet Sources:
 www.Businessweek.com/print/globalbiz/content/Jan

 http://www.tatasteel.com

2. Magazines:
 India Today
 Business news

3. Other Sources:
 Tata Steel ratings cut to ‘BB’ with positive outlook after Corus buy.
AFX News Limited, [email protected] at Forbes.com.
 Tata Steel Makes It to Fortune 500 List, Indiaserver.com

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 CHAPTER 6
ANNEXURES

Tata Steel Limited

Table 1: Tata Steel (Comparative Analysis)

( Fig in Crores )
Pre Merger Post Merger
Year
2005 2006 2011 2012
Net Sales 14,489.70 15,132.09 29,307.35 33,838.51
Operating Profit 5,956.02 5,884.22 11,170.25 12,012.49
Reported Net Profit 3,474.16 3,506.38 6,865.69 6,696.42
EBIT 6,064.77 6,136.80 12,606.05 12,935.91
Total Liabilities 9,799.62 12,271.45 76,745.77 75,910.28
Net worth 7,059.92 9,755.30 48,444.63 52,216.46
Total Debt 2,739.70 2,516.15 28,301.14 23,693.82
Total Share Capital 553.67 553.67 959.41 971.41
Earnings Per Share 71.5 68.95
(Rs) 62.77 63.35 8

24
Table 2: - Pre Merger
TATA STEEL LIMITED
BALANCE SHEET AS AT 31.03.2006
(Figures in crores)
PARTICULARS 2006 2005
FUNDS EMPLOYED:  
Share Capital 553.67 553.67
Reserves And Surplus 9,201.63 6,506.25
TOTAL SHAREHOLDERS' FUNDS 9,755.30 7,059.92
LOANS  
A. Secured 2,191.74 2,468.18
B. Unsecured 324.41 271.52
Total Loans 2,516.15 2,739.70
Deferred Tax Liability (Net) 957.00 829.42
Provision For Employee Separation Compensation 1,388.71 1,514.26
TOTAL LIABILITES 14,617.16 12,143.30
FIXED ASSETS  
Gross Block 16,564.90 15,055.25
Less — Impairment 94.19 97.52
Less — Depreciation 6,605.66 5,845.49
  9,865.05 9,112.24
INVESTMENTS 4,069.96 2,432.65
CURRENT ASSETS
A Stores And Spare Parts 442.66 349.06
B Stock-In-Trade 1,732.09 1,523.34
C Sundry Debtors 539.40 581.82
D Interest Accrued On Investments 0.20 0.20
E Cash And Bank Balances 288.39 246.72
3,002.74 2,701.14
LOANS AND ADVANCES 1,234.86 1,382.44
  4,237.60 4,083.58
Less : CURRENT LIABILITIES AND
PROVISIONS  
Current Liabilities 2,835.99 2,689.83
Provisions 972.73 1,010.16
NET CURRENT ASSETS 428.88 383.59
MISCELLANEOUS EXPENDITURE 253.27 214.82
   
TOTAL ASSETS (Net) 14,617.16 12,143.30
Table3: Pre Merger

25
 TATA STEEL LIMITED
PROFIT & LOSS Account
For the year ended 31.03.2006
(Figures in Crores)
Particulars 2006 2005
INCOME
Sale Of Products And Services 17,144.22 15,876.87
Less — Excise Duty 2,004.83 1,377.92
  15,139.39 14,498.95
Other Income 254.76 148.03
TOTAL INCOME(A) 15,394.15 14,646.98
EXPENDITURE:
Manufacturing And Other Expenses 9,320.50 8,658.41
Depreciation 775.10 618.78
  10,095.60 9,277.19
Less — Expenditure (Other Than Interest) 112.62 204.82
  9,982.98 9,072.37
Less -- Interest 118.44 186.80
TOTAL EXPENDITURE(B) 10,101.42 9,259.17
Profit Before Taxes And Exceptional Items(A-B) 5,292.73 5,387.81
Employee Separation Compensation (52.77) (119.11)
Profit On Sale Of Long Term Investment - 28.58
Profit Before Taxes 5,239.96 5,297.28
Taxes    
(A) Current Tax 1,579.00 1,833.66
(B) Deferred Tax 127.58 (10.54)
(C) Fringe Benefits Tax 27.00 -
  1,733.58 1,823.12
Profit After Taxes 3,506.38 3,474.16
Balance Brought Forward From Last Year 1,790.21 637.42
Amount Available For Appropriations 5,296.59 4,111.58
Appropriations:
(A) Proposed Dividends 719.51 719.51
(B) Tax On Dividends 100.92 101.86
  820.43 821.37
(C) General Reserve 1500 1500
  2320.43 2321.37
BALANCE CARRIED TO BALANCE SHEET 2976.16 1790.21
Basic And Diluted Earnings Per Share Rs 63.35 62.77

Table 4: - Post Merger

TATA STEEL LIMITED

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 BALANCE SHEET AS AT 31.03.2012
(Figures in crores)
PARTICULARS 2012 2011
FUNDS EMPLOYED:  
Share Capital 971.41 959.41
Reserves And Surplus 51,649.95 45,807.02
Money received against share warrants - 178.20
TOTAL SHAREHOLDERS' FUNDS 52,621.36 46,944.63
Hybrid Perpetual Securities 2,275.00 1,500.00
LOANS  
A. Secured 21,353.20 24,499.05
B. Unsecured 216.05 373.88
Total Loans 21,569.25 24,872.93
Deferred Tax Liability (Net) 970.51 936.80
Provision For Employee Separation Compensation 1,851.30 2,201.47
Current Liabilities  
(a) Short-term borrowings 65.62 149.13
(b) Trade payables 5,973.23 4,464.81
(c) Other current liabilities 8,798.55 6,262.10
(d) Short-term provisions 2,066.24 2,219.85
TOTAL LIABILITES 96,191.06 89,551.72
ASSETS  
Non -current Assets    
(a) Fixed Assets 11,142.36 11,532.58
(i) Tangible assets 16,058.49 5,612.28
(ii) Capital work-in-progress 223.90 272.52
(iii) Intangible assets 27,424.75 17,417.38
(b) Non-current investments  
(i)Foreign currency monetary item translation difference account 404.90 –
(ii)Long-term loans and advances 6,415.80 10,453.41
(iii)Other non-current assets 2.76 2.76
  83,326.56 71,438.70
CURRENT ASSETS
(a) Current investments 1,204.17 2,999.79
(b) Inventories 4,858.99 3,953.76
(c) Trade receivables 904.08 424.02
(d) Cash and bank balances 3,946.99 4,138.78
(e) Short-term loans and advances 1,828.09 6,458.94
(f) Other current assets 122.18 137.73
TOTAL ASSETS (Net) 96,191.06 89,551.72

Table 5: - Post Merger

TATA STEEL LIMITED
PROFIT & LOSS Account

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 For the year ended 31.03.2012
(Figures in Crores)
Particulars 2012 2011
INCOME
Revenue from operations 37,005.71 31,902.14
Less — Excise Duty 3,072.25 2,505.79
  33,933.46 29,396.35
Other Income 886.43 528.36
TOTAL INCOME(A) 34,819.89 29,924.71
EXPENDITURE:
(a) Raw materials consumed 8,014.37 6,244.01
(b) Purchase of finished, semi-finished and other products 209.52 180.20

(c) Changes in inventories of finished goods, work-in-progress (220.72) (173.65)

(d) Employee benefits expense 3,047.26 2,837.46
(e) Depreciation and amortization expense 1,151.44 1,146.19
(f) Finance costs 1,925.42 1,735.70
(g) Other expenses 11,824.49 9,024.82
  25,951.78 20,994.73
(h) Less: Expenditure (other than interest) transferred to
Capital 478.23 198.78
TOTAL EXPENDITURE(B) 25,473.55 20,795.95
Profit Before Taxes And Exceptional Items(A-B) 9,346.34 9,128.76
Profit on sale of non-current investments 511.01 648.09
Profit Before Taxes 9,857.35 9,776.85
Taxes    
(A) Current Tax 3,115.11 2,857.00
(B) Deferred Tax 45.82 54.16
Profit After Taxes 6,696.42 6,865.69
Basic Earnings per share (`) 67.84 75.63
Diluted Earnings per share (`) 66.62 70.99

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