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Tata & Corus: Presented By:-Ankur Keshari Ashish Lal Priyanka Jain Ritu Gautam Presented To: - Ms. Parul Nagar
Tata & Corus: Presented By:-Ankur Keshari Ashish Lal Priyanka Jain Ritu Gautam Presented To: - Ms. Parul Nagar
Objectives of Research
Introduction.
The DEAL.
TATA after Acquisition.
2009
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Conclusion
and
business history.
span of 30 years.
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Cont
Steel industry (heavy industry) is considered as a
on a world map.
by developed countries.
China
China highest Steel producing country
JEF Steel
Tata Steel - Corus Bao steel China US Steel
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27.5 23 19
companies : British Steel and Koninklijke Hoogovens. Consist of four divisions : Strip products, Long products, Aluminum and Distribution, Building system Operates as an International company Core business in Manufacturing, Development and Allocation of Aluminum and Steel products and services Wide variety of products and services Largest steel producer in UK with 10,142 million annual revenue and work force of 50,000 employees
Objectives of Acquisition
Higher profitability
million tonnes giving it the position of Global number 2. To gain access to global steel market and expand production capacity to keep pace with growing demand for steel Jim Leng, Chairman of CorusThis offer from Tata Steel reflects the substantial value created for Corus shareholders
Objectives of Acquisition
TATA looking for mature market in Europe for its
finished products Corus holds a number of patients and R & D facility. Cost of Acquisition lower than setting up a green field plant and marketing and distribution channel. Corus wanted to reduce its employees cost and TATA is well known for handling its labours efficiently.
Consolidation Synergy
As part of its integration process being done at
two levels, the steel makers expects to cross the $450 million target by the end of 2010.
Synergy targets to be achieved included areas of
manufacturing procurement research and development, I.T., Finance and capital projects
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one by 2007 08 through new initiatives, to be called ASPIRE, in all relevant areas of our business. We will continue to be the lowest cost producer of steel in the world by continuous improvement, benchmarking and up gradation. We will strengthen our partnerships with our customers and suppliers, and create mutually value creating opportunities. Unleash peoples potential and create more leaders. This Company has had and has many outstanding
The DEAL..
Officially announced on April 2nd 2007. TATAs motive is to capture the market value.
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producer. Oct 06, 06 : Initial offer by TATA is considered to be too low. Oct 17, 06: TATA kept its offer to 455 pence per share. Oct 20, 06 : CORUS accepts the offer of 4.3 billion. Oct 23, 06 : Brazilian Steel Group CSN counter-offer to TATAs offer. Oct 27, 06 : CORUS criticized by JCB for acceptance of TATAs offer. Nov 18, 06 : The CSN approaches Corus With an offer of 475 pence per share Nov 27, 06 : Board of Corus decides to give more time for shareholders to decide whether it issue forward a formal offer. Dec 18,06 : Tata increases its original bid for Corus 500 pence per share, then CSN made its counter bid at 515 pence per share in cash Jan 31, 07 : Tata had agreed to offer Corus investors 608 pence per
financed.
After the bidding conflict with CSN, TATA ended up
Weakness
Corus was triple the size of TATA steel in terms of
production.
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Swot Analysis
Opportunity
Consolidation trend in Steel Industry CSNs lost image after failure of 2002 negotiations To get exposed to global steel market
Threat
Brazil company CSN Russian company Severstal
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Corus) of Rs 2,209 crore ($461 million). Incurred a profit of Rs 3,901 crore ($814 million ) in the April-June quarter of FY09. Sales volume of Indian operations was higher by 22 percent but sales from its European operations (Corus) fell heavily. Group consolidated turnover was Rs.23,292 crores as compared to Rs. 43,496 crores.
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interpretation.
Identifies various characteristics of organization. Prediction is used outside the boundary of
research.
Provides facts for planning action program.
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automotive sectors.
Bidding Disturbance from CSN to TATA Steel
455 pence per share is pushed to 608 pence per share
of Corus.
Main Competitors are CSN and SEVERSTAL
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targets management Local Market reaction Arranging funds as it was an all cash deal
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Alternates
Global Expansion
Taking the TATA trust globally Joint Ventures with other steel manufacturers Could have searched for reserves in India,
Singapore etc.
Profitability
Could have diversified its investment
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Alternatives
Expansion If TATA steel were to create, from
scratch, 19 million tonnes of steel making capacity comparable in quality to what Corus possesses, It would end up investing 70% to 85% more than it is paying now.
Besides, setting up a new factory, a 3 to 5 years
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Contingency Plan
The Contingency plan could have been a joint
venture with mittal steels as it is allready into process of setting up a big steel unit in Orrisa, TATA could have provided them with iron ore reserves and would have expected share in its profits
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Conclusion
I believe this will be the first step in showing that Indian industry can step outside the shores of India in an international market place and acquit itself as a global player -
Ratan Tata
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