Tata Segment Analysis
Autor: sakshi.gupta • June 30, 2015 • Essay • 846 Words (4 Pages) • 1,556 Views
Tata Steel: Business Segments
FSA Section-B: Assignment – 1
Submitted by: Manish Meshram – PGP30259
Tata Steel
The business model of the Tata Steel group is aligned to its vision of “Becoming the Benchmark in Value Creation and Corporate Citizenship” in the steel industry. Through this, it maintains a strategic focus on continuous value creation for all its stakeholders. The Company is one of the largest steel producers in the world and one of the world’s most geographically diversified, with operations in 26 countries and a commercial presence in over 50 countries. With a focus on continuous improvement, the Company meets diverse customer requirements across multiple segments, globally.
Segement Analysis
On the basis on past five years’ annual reports, the Tata Steel’s business segment has been analyzed. For data refer last page. Tata Steel reports three segments in its annual report. They are “Steel”, “Ferro Alloys & Minerals” and “Others”. Tata Steel generates maximum revenue from its operations in steel production. Ferro Alloys & Minerals is the second dominant sector and Others is the third.
Percentage of Total Revenue Generated (External & Internal Sales).
Year | Steel | Ferro Alloys & Minerals | Others |
2014 | 92.75% | 7.00% | 5.30% |
2013 | 92.33% | 7.62% | 5.36% |
2012 | 92.26% | 7.29% | 5.90% |
2011 | 91.38% | 8.27% | 6.26% |
2010 | 91.77% | 7.41% | 6.29% |
It can be seen that steel generation is the dominat segment of business for Tata Steel, in terms of revenue generation. Others is the least contributor to the revenue generation. CAGR of revenue of the three segments – Steel, Ferro Alloys & Minerals and Others are 11%, 9.51% & 7.03% respectively. Tata Steel has been expanding its growth and market for steel around the globe.
Tata Steel does not report profit generation by different segments, rather it provides data of overall profit generation. The profit growth of Tata Steel is 4.91% (CAGR).
Segment wise asset generated by Tata Steel is shown in the table below. As it can be seen from the table that Tata Steel is investing more on steel generation. The Ferro Alloys & Minerals is second dominant sector where Tata Steel invests. This would be perhaps to integrate the processes for low cost production. Based on past five years of data, segment wise CAGR of assest is 21.66%, 9.28% & 7.51% for Steel, Ferro Alloys & Minerals and Others. This clearly depicts that the company is moving towards production of steel as its basic priority. This will enable Tata Steel to achieve economies of scale.
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