Eic Analysis of Tata Steel
LUCKY BHAVINI
B.COM(H)III-E
ROLL NO.-247
GROUP NO.-E27 EIC ANALYSIS OF TATA STEEL
ECONOMIC ANALYSIS:
* The Financial market in the last 12 months has been volatile triggered by the subprime mortgage crisis in the US. This has adversely affected the liquidity and the risk perception of the international capital markets. Inflation has increased around the World boosted by mainly increase in food and energy prices. The real effective exchange rate for the US dollar has declined since mid-2007 as foreign investment in US bonds and equities has been dampened by reduced confidence in both the liquidity of and the returns on such assets, weakening of US growth prospects and interest rate cuts. The main counterpart to the decline of the dollar has been appreciation of the euro, the yen, and other floating currencies such as the Canadian dollar and some emerging economy currencies. Corus acquisition is being financed by a substantial amount of debt. This puts pressure on Tata Steel’s bottom line, and should the business environment deteriorate, the necessity to service this debt could restrain Tata Steel in its future investment and capacity expansion plans. In addition it could also limit the Company’s inorganic growth options.
* Due To Subprime Crisis in USA an subsequent tremor all along the world, especially in developed market in Western Europe make the vulnerable position of Corus even more riskier.UK, Germany, Netherlands the main market for Corus products are facing the fear for recession on negative growth.
* The steel industry is highly cyclical, receptive to general economic conditions and reliant on the condition of a number of other industries, including the automotive, appliance, construction and energy industries. If these industries experience a downturn, Tata Steel too would too take a hit, thus negatively impacting its rating.
* Corus follows the policy of entering into long term supply contracts with
B.COM(H)III-E
ROLL NO.-247
GROUP NO.-E27 EIC ANALYSIS OF TATA STEEL
ECONOMIC ANALYSIS:
* The Financial market in the last 12 months has been volatile triggered by the subprime mortgage crisis in the US. This has adversely affected the liquidity and the risk perception of the international capital markets. Inflation has increased around the World boosted by mainly increase in food and energy prices. The real effective exchange rate for the US dollar has declined since mid-2007 as foreign investment in US bonds and equities has been dampened by reduced confidence in both the liquidity of and the returns on such assets, weakening of US growth prospects and interest rate cuts. The main counterpart to the decline of the dollar has been appreciation of the euro, the yen, and other floating currencies such as the Canadian dollar and some emerging economy currencies. Corus acquisition is being financed by a substantial amount of debt. This puts pressure on Tata Steel’s bottom line, and should the business environment deteriorate, the necessity to service this debt could restrain Tata Steel in its future investment and capacity expansion plans. In addition it could also limit the Company’s inorganic growth options.
* Due To Subprime Crisis in USA an subsequent tremor all along the world, especially in developed market in Western Europe make the vulnerable position of Corus even more riskier.UK, Germany, Netherlands the main market for Corus products are facing the fear for recession on negative growth.
* The steel industry is highly cyclical, receptive to general economic conditions and reliant on the condition of a number of other industries, including the automotive, appliance, construction and energy industries. If these industries experience a downturn, Tata Steel too would too take a hit, thus negatively impacting its rating.
* Corus follows the policy of entering into long term supply contracts with