The Fortune 500 Company That Is Tata Steel

Tata Steel Limited (NSE: TATASTEEL, BSE: 500470) (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian multinational steel-making company headquartered in Mumbai, Maharashtra, India, and a subsidiary of the Tata Group. It is the12th-largest steel producing company in the world, with an annual crude steel capacity of 23.8 million tonnes, and the largest private-sector steel company in India measured by domestic production. Tata Steel has manufacturing operations in 26 countries, including Australia, China, India, the Netherlands, Singapore, Thailand and the United Kingdom, and employs around 81,600 people. Its largest plant is located in Jamshedpur, Jharkhand. In 2007 Tata Steel acquired the UK-based steel maker Corus in what was the largest international acquisition by an Indian company to date. Tata Steel is listed on the Bombay Stock Exchange, where it is a constituent of the BSE SENSEX index, and the National Stock Exchange of India.[7] It is ranked 401st in the 2012Fortune Global 500 ranking of the world’s biggest corporations.[8] It is the eighth most-valuable Indian brand according to an annual survey conducted by Brand Finance and The Economic Times in 2010.

History
Tata Iron and Steel Company was established by Dorabji Tata on August 26, 1907, as part of his father Jamsetji’s Tata Group. By 1939 it operated the largest steel plant in the British Empire. The company launched a major modernization and expansion program in 1951. Later, the program was upgraded to 2 MTPA project. In 1990, it started expansion plan and established its subsidiary Tata Inc. in New York. The company changed its name from TISCO to Tata Steel in 2005. In August 2004, Tata Steel agreed to acquire the steelmaking operations of the Singapore-based NatSteel for S$486.4 million in cash.] The acquisition was completed in February 2005. In 2005, Tata Steel acquired a 40% stake in the Thailand-based steelmaker Millennium Steel for $130 million from Siam Cement. In 2007 Tata Steel through its wholly owned Singapore subsidiary, NatSteel Asia Pte Ltd acquired controlling stake in two rolling mills: SSE Steel Ltd, Vinausteel Ltd located in Vietnam.

Operations

Tata Steel is headquartered in Mumbai, Maharashtra, India and has its marketing headquarters at the Tata Centre in Kolkata, West Bengal. Tata Steel has a presence in around 50 countries with manufacturing operations in 26 countries including: India, Malaysia, Vietnam, Thailand, Dubai, Daggaron, Ivory Coast, Mozambique, South Africa, Australia, United Kingdom, The Netherlands, France and Canada. Tata Steel primarily serves customers in the automotive, construction, consumer goods, engineering, packaging, lifting and excavating, energy and power, aerospace, shipbuilding, rail and defence and security sectors.

Controversies
The company is facing increasing criticism that the drive for growth and profits is completely overshadowing its once famed philanthropy, and causing lasting social and environmental damage at various locations. In response, Tata cites its programs for environment and resource conservation, including reduction in greenhouse emission, raw materials and water consumption. The company has increased waste re-use and re-cycling, and reclaims land at its captive mines and collieries through forestation. Tata Steel’s chief, environment and occupational health, says, “Our capital investment in pollution-abatement solutions was in the vicinity of 4 billion in 2003-04.”

Wipro Limited (formerly Western India oilment Limited) (NYSE: WIT,BSE: 507685) is an information technology (IT) consulting and outsourcing service company located in Bangalore, Karnataka, India. As of 2012, the company had 140,000 employees in 54 countries. Wipro is the second largest IT services company in India. Its subsidiary, Wipro Enterprises Ltd., offers consumer care, lighting, healthcare, and infrastructure engineering.

History
Early formative years
The company was incorporated on 29 December 1945 in Mumbai by Mohamed Hasham Premji as Western India Products Limited, later abbreviated to Wipro. It was initially set up as a manufacturer of vegetable ghee, vanaspati and refined oils in Amalner, Dist:Jalgaon, Maharashtra under the trade names of Kisan, Sunflower and Camel. The company logo still contains a sunflower to reflect products of the original business. In 1966, after his father’s death, Azim returned home from Stanford University and took over Wipro as its chairman at the age of 21. He was instrumental in transforming Wipro into a profitable, diversified corporation that included such products as the Wipro SuperGenius personal computers (PCs), which in 1999 was the one Indian PC range to obtain US-based National Software Testing Laboratory (NSTL) certification for the Year 2000 (Y2K) compliance in hardware for all models. Azim Premji is a major shareholder in Wipro. During the 1970s and 1980s, the company shifted its focus to new business opportunities in the IT and computing industry, which was at a nascent stage in India at the time. In June 7, 1977, the name of the Company was changed from Western India Vegetable Products Limited., to Wipro Products Limited. The year 1980 marked the arrival of Wipro in the IT domain. In 1982, the name was changed from Wipro Products Limited to Wipro Limited Meanwhile Wipro continued to expand in the consumer products domain with the launch of `Ralak’ a tulsi based family soap and `Wipro Jasmine’, a toilet soap. 2001 onwards

In February 2002, Wipro became the first software technology and services company in India to be certified for ISO 14001 certification.] Wipro also achieved ISO 9000 certification to become the first software company to get SEI CMM Level 5 in 2002. Wipro Consumer Care and Lighting Group entered the market of Compact Fluorescent Lamps, with the launch of a range of CFL, under the brand name of Wipro Smartlite.As the company grew, a study revealed that Wipro was the fastest wealth creator for 5 years (1997–2002). The same year witnessed the launch of Wipro’s own laptops with Intel’s Centrino mobile processor. Wipro also entered into an exclusive agreement with the owners of Chandrika for marketing of their soap in select states in India. It set up a wholly owned subsidiary company viz. Wipro Consumer Care Limited to manufacture consumer care and lighting products.

In 2004, Wipro joined the billion dollar club. It also partnered with Intel for i-shiksha. The year 2006 saw Wipro acquire cMango Inc., a US based Technology Infrastructure Consulting firm Enabler, and a Europe based retail solutions provider. In 2007, Wipro inked a large deal with Lockheed Martin. It also entered into a definitive agreement to acquire Oki Techno Centre Singapore Pte Ltd (OTCS) and signed an R&D partnership contract with Nokia Siemens Networks in Germany. The year 2008 saw Wipro’s foray into the clean energy business with Wipro Eco Energy. In April 2011, Wipro signed an agreement with Science Applications International Corporation (SAIC) for the acquisition of their global oil and gas information technology practice of the commercial business services business unit. The year 2012 saw Wipro make its 17th acquisition in IT business when it acquired Australian analytics product firm Promax Applications Group (PAG) for $35 million.

Introduction

A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements.

TOOL TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS
Financial statements of a business provide different pieces of financial information according to the needs of decision makers. The statements which are published now and which become available to the decision makers include income statement (profit and loss account) and financial position statement (balance sheet). For a company in India, cash flow statement and earnings per share statement have to be appended moreover. In order to make decision making effective and powerful, the financial data provided by the statements require analysis, comparison and interpretation. In the words of J. N. Myres, “Financial statement analysis is designed to indicate the strength and weakness of business undertaking through the establishment of certain crucial relationship by regrouping and analysis of figures contained in financial statements.” Analysis of financial statements may be done by applying a number of techniques. But as any particular technique is not self sufficient or equally applicable for any purpose the financial analyst has to choose and combine more than one technique for an effective analysis and proper interpretation. The techniques normally used are –

1. Comparative statements (Analysis)
2. Common size statements (Analysis)
3. Trend Analysis
4. Ratio Analysis

There are other forms of analysis like –
Fund flow analysis, cash flow analysis, cost volume profit analysis, balanced score card, multivariate analysis and calculation of scores like Z score, A score and H score.

Purpose of financial statements by business entities

“The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.” Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization’s financial position. Financial statements are intended to be understandable by readers who have “a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. Financial statements may be used by users for different purposes: * Owners and managers require financial statements to make important business decisions that affect its continued operations.Financial analysis is then performed on these statements to provide management with a more detailed understanding of the figures. These statements are also used as part of management’s annual report to the stockholders.

* Employees also need these reports in making collective bargaining agreements (CBA) with the management, in the case of labor unions or for individuals in discussing their compensation, promotion and rankings. * Prospective investors make use of financial statements to assess the viability of investing in a business. Financial analyses are often used by investors and are prepared by professionals (financial analysts), thus providing them with the basis for making investment decisions. * Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures.

Government financial statements
The rules for the recording, measurement and presentation of government financial statements may be different from those required for business and even for non-profit organizations. They may use either of two accounting methods: accrual accounting, or cash accounting, or a combination of the two (OCBOA). A complete set of chart of accounts is also used that is substantially different from the chart of a profit-oriented business.

Financial statements of not-for-profit organizations
The financial statements that not-for-profit organizations such as charitable organizations and large voluntary associations publish, tend to be simpler than those of for-profit corporations. Often they consist of just a balance sheet and a “statement of activities” (listing income and expenses) similar to the “Profit and Loss statement” of a for-profit. Charitable organizations in the United States are required to show their income and net assets (equity) in three categories: Unrestricted (available for general use), Temporarily Restricted (to be released after the donor’s time or purpose restrictions have been met), and Permanently Restricted (to be held perpetually, e.g., in an Endowment).

Personal financial statements
Personal financial statements may be required from persons applying for a personal loan or financial aid. Typically, a personal financial statement consists of a single form for reporting personally held assets and liabilities (debts), or personal sources of income and expenses, or both. The form to be filled out is determined by the organization supplying the loan or aid.

Audit and legal implications
Although laws differ from country to country, an audit of the financial statements of a public company is usually required for investment, financing, and tax purposes. These are usually performed by independent accountants or auditing firms. Results of the audit are summarized in an audit report that either provide an unqualified opinion on the financial statements or qualifications as to its fairness and accuracy. The audit opinion on the financial statements is usually included in the annual report. There has been much legal debate over who an auditor is liable to. Since audit reports tend to be addressed to the current shareholders, it is commonly thought that they owe a legal duty of care to them. But this may not be the case as determined by common law precedent. In Canada, auditors are liable only to investors using a prospectus to buy shares in the primary market. In the United Kingdom, they have been held liable to potential investors when the auditor was aware of the potential investor and how they would use the information in the financial statements.

Nowadays auditors tend to include in their report liability restricting language, discouraging anyone other than the addressees of their report from relying on it. Liability is an important issue: in the UK, for example, auditors haveunlimited liability. In the United States, especially in the post-Enron era there has been substantial concern about the accuracy of financial statements. Corporate officers (the chief executive officer (CEO) and chief financial officer (CFO)) are personally liable for attesting that financial statements “do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by th[e] report.” Making or certifying misleading financial statements exposes the people involved to substantial civil and criminal liability. For example Bernie Ebbers (former CEO of WorldCom) was sentenced to 25 years in federal prison for allowing WorldCom’s revenues to be overstated by billion over five years.

Standards and regulations
Different countries have developed their own accounting principles over time, making international comparisons of companies difficult. To ensure uniformity and comparability between financial statements prepared by different companies, a set of guidelines and rules are used. Commonly referred to as Generally Accepted Accounting Principles (GAAP), these set of guidelines provide the basis in the preparation of financial statements, although many companies voluntarily disclose information beyond the scope of such requirements.[4] Recently there has been a push towards standardizing accounting rules made by the International Accounting Standards Board(“IASB”). IASB develops International Financial Reporting Standards that have been adopted by Australia, Canada and the European Union (for publicly quoted companies only), are under consideration in South Africa and other countries. The United States Financial Accounting Standards Board has made a commitment to converge the U.S. GAAP and IFRS over time.

Inclusion in annual reports
To entice new investors, most public companies assemble their financial statements on fine paper with pleasing graphics and photos in an annual report to shareholders, attempting to capture the excitement and culture of the organization in a “marketing brochure” of sorts. Usually the company’s chief executive will write a letter to shareholders, describing management’s performance and the company’s financial highlights. In the United States, prior to the advent of the internet, the annual report was considered the most effective way for corporations to communicate with individual shareholders. Blue chip companies went to great expense to produce and mail out attractive annual reports to every shareholder. The annual report was often prepared in the style of a coffee table book.

Moving to electronic financial statements
Financial statements have been created on paper for hundreds of years. The growth of the Web has seen more and more financial statements created in an electronic form which is exchangeable over the Web. Common forms of electronic financial statements are PDF and HTML. These types of electronic financial statements have their drawbacks in that it still takes a human to read the information in order to reuse the information contained in a financial statement. More recently a market driven global standard, XBRL (Extensible Business Reporting Language), which can be used for creating financial statements in a structured and computer readable format, has become more popular as a format for creating financial statements. Many regulators around the world such as the U.S. Securities and Exchange Commission have mandated XBRL for the submission of financial information. The UN/CEFACT created, with respect to Generally Accepted Accounting Principles, (GAAP), internal or external financial reportingXML messages to be used between enterprises and their partners, such as private interested parties (e.g. bank) and public collecting bodies (e.g. taxation authorities). Many regulators use such messages to collect financial and economic information.

TREND ANALYSIS
The word trend analysis refers to a general or prevailing tendency of something to move towards the future. Comparative studies of the components of financial statements of two or more years reveal some characteristics about their tendency of movement. When comparative statements for more than two accounting periods are prepared, the statement of each year is compared with the statement of base year or with that of immediately preceding year. By making trend analysis, the past movements of some key factors like sales, operating expenses or profits etc., are ascertained. The findings guide the analyst to make prediction about their future course of behavior. ADVANTAGES OF TREND ANALYSIS

* The trend data can be used for Inter-firm comparisons.
* A readymade view of periodic changes of important financial aspects helps in quick learning or formation of idea. * The analysts make predictions about tentative growths and prospects coming in the future. It helps to make better programming for future. * The investors can depend upon the Trend Analysis of matters important to them. They can take decisions more rationally or prudently. Trend Analysis depends upon –

* The absolute figures,
* Accounting policies and method,
* Selection of base year,
* Trend percentages,
* Adjustment for changes in price level, stock, valuation method etc.

The following figures are obtained by Tata Steel about operating profit during the last five years.

Methodology
We, the students of B.Com Part-III (Honors), under the guidance of Mr. Chiranjib Saha started to do a project on Financial Statement Analysis. We collected financial data of last five financial years of Wipro & Tata steel for this project. Financial data so collected are analyzed using different techniques and finally interpreted.