Tatasteel Tata

100th Annual Report 2006-2007
 
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Directors' Report

 

To the Members,
The Directors hereby present their hundredth annual report on the business and operations of the Company and the
financial accounts for the year ended 31st March, 2007.

      Rupees Crores Previous Year Rupees Crores
1. (a) Net Sales/Income 17552.02 15215.50
  (b) Total Expenditure 10578.75
9277.92
  (c) Operating Profit 6973.27 5937.58
  (d) Add : Dividend and Other Income 433.67
254.76
  (e) Profit before Interest, Depreciation, Exceptional items and Taxes 7406.94 6192.34
  (f ) Less : Interest 173.90
124.51
  (g) Profit before Depreciation, Exceptional items and Taxes 7233.04 6067.83
  (h) Less : Depreciation 819.29
775.10
  (i) Profit before Exceptional items and Taxes 6413.75 5292.73
  (j) Less : Exceptional items 152.10 52.77
  (k) Profit before Taxes 6261.65 5239.96
  (l) Less : Provision for Current Taxation 2076.01 1579.00
  (m) Less : Provision for Deferred Taxation (52.51) 127.58
  (n) Less : Provision for Fringe Benefits Tax 16.00
27.00
  (o) Profit after Taxes 4222.15 3506.38
  (p) Add : Balance brought forward from the previous year 2976.16
1790.21
  (q) Balance 7198.31
5296.59
    Which the Directors have appropriated as under, to :    
    (i) Proposed Dividend 943.91 719.51
    (ii) Tax on Dividend 160.42 100.92
    (iii) General Reserve 1500.00
1500.00
    TOTAL 2604.33

2320.43

    Leaving a balance of to be carried forward 4593.98

2976.16


Centenary Year

The founder, Jamsetji Tata, had a vision to make India self-reliant. While he wanted the industry to thrive and prosper, he also believed in the philosophy of sharing the wealth so generated for the benefit of the society at large. During the past century, the Company has always endeavoured to live up to the ideals of its founder. The Directors wish to express their sincere gratitude to all the stakeholders, i.e. shareholders, customers, employees and partners of the Company, for their support and unstinted loyalty in making this long journey a successful and rewarding one.

 

Steel Industry

The year 2007 is one of the most important milestone in the history of the Company, for three main reasons. It has ushered in the centenary year of the Company when it enters hundred years of existence in the month of August 2007. The year 2006-07 has also seen the highest turnover and profits, continuing the trend of the past four years. Last but not the least, Tata Steel enhanced its presence on the international steel scene with the acquisition of the U.K. based company, Corus Group plc.

Economic conditions during the year continued to be buoyant around the world. Even Japan, which was mired in a stagflationary situation for several years, participated in the global growth momentum. Asia continued to be the prime mover of growth, with China once again dominating the world economic scene. India was not far behind. With the Indian economy growing at 9.4% in the year under review, it is expected that the current year as well will see India’s GDP growing at around 9%.

Growth in steel consumption has accelerated in recent years. During the last five years, the world steel consumption has increased by approximately 338 million tonnes from 775 million tonnes in 2001 to 1,113 million tonnes in 2006. This represents an average compounded annual growth rate of around 7.5%, as compared to a modest 1% yearly growth in the previous three decades upto 2000. World steel production has also kept pace with an increase of 8.9% during 2006 over the previous year.

Domestic steel production and apparent consumption were higher by 11.1% and 11.7% respectively over the previous year. It is widely believed that the Indian economy could sustain an annual growth rate of 8-9% in the long term. This could translate into a 10% rise in annual steel demand over the next ten years. The main drivers of
this growth are the expected large investments in infrastructure, large-scale construction activities and the sustained rise in demand for auto and white goods from a burgeoning middle class in the country.

While the robust steel demand globally has enabled the steel prices to remain buoyant, there has been significant pressure on margins from increased raw material prices on non-integrated steel players.

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