Indian Tata Steel set to become EVA positive in four years

Indian Tata Steel set to become EVA positive in four years

Major Indian steel making company Tata Steel launches a new programme with the purpose of becoming Economic Value Addition (EVA) positive. The target is to become EVA positive by 2007, yet the company expects to achieve it before that date. EVA positiveness is a state where a company is earning returns on its entire investments to date, which can be understood as calculating net operating profit minus a capital charge for the investment or capital employed in the business. So far only a few companies have succeeded to be EVA positive only for short periods. Indian steelmaker now aims to become EVA positive on average prices so to maintain the situation independent from prices. Tata Steel reports that it aims to obtain of around Rupees 10 billion net profit to become EVA positive for which there is a gap of Rupees 5-6 billion when performed at average prices.