Corus Acquisition – A Giant Leap Forward
Thursday, February 01, 2007
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A proud moment for India, as the Tatas won the battle to acquire
Corus with
a winning bid of 608 pence a share in London on Wednesday.
Way back at the turn of the 20th century, when India could not
manufacture even a steel pin, Jamshedji Tata fired the country’s
first blast furnace in Sakchi, Jamshedpur to meet its basic needs.
Now a century later, Tata Steel
stands fifth in the world’s hierarchy of steel corporations. Interestingly,
the Mittal-Arcelor combine is at No.1.
As the world’s seventh largest steel manufacturer in the world,
India produces 40 million metric tones of steel today, a tenth of
China’s output. This excludes NRI
interests overseas like Mittal-Arcelor, Essar, or acquisitions like
Tatas’. Per capita steel consumption is considered the measuring
rod for economic development, and India has miles to go before it
reaches the magic 300 kg per capita figure.
Knee-jerk reactions to the deal were witnessed on the bourses.
Tata Steel stocks dipped by 10.47% on Wednesday, as doubtful investors
engaged in heavy trading.
At Bombay House however, euphoria prevailed as the Tata Group’s
turnover touched Rs.1.5 lakh crore, surpassing Mukesh Ambani’s Reliance
Group which stands at Rs. 89, 000 crore.
For the Tatas, it is the second major acquisition after Tetley
Tea in 2000 for $407 million, and a refurbishing of its image
as a laidback, bureaucratic organization. With interests in IT,
automobiles, telecom, hotels, insurance, wealth mangement, and consumer
goods, the Tata group will derive 40 % of its business from steel
alone, post Corus.
A giant leap forward for Indian industry, as it competes with companies
on the international stage.
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Photo: Dallas skyline 1912c by Johnson & Rogers, licensed under Public domain, via Wikimedia Commons.
