Thursday, January 31, 2008

Tata Steel-Corus deal on track

Exactly one year ago India Inc witnessed the biggest ever acquisition. Yes, we are talking about Tata Steel’s acquisition of Corus group. The stock market didn’t respond positively with the apprehension among investors being that the deal may not turn out to investor’s interest. The stock price fell by around 7% in 15 days after Tata Steel won the bid ousting CSN.

But after one year, the sceptics have been proved wrong. Corus’ finances are improving and Tata Steel is now India’s largest private sector company with consolidated net sales of Rs 63,587 crore in the first half of FY08. The stock market has also recognised this. The stock price more than doubled until the stock market crash kicked off on January 10. Tata Steel was, in fact, the best performing company in the Tata Group last year.

Tata Steel has taken many steps to make the best out of this deal. Its acquisition of iron ore and coking coal mines in Mozambique and Ivory Coast can feed the Corus plants for around 10 years and 20 years, respectively. Recently, it took majority control of a limestone mine in Oman. These captive sources of raw material are expected to reduce Corus’ operating cost giving a big boost to Tata Steel’s profits on a consolidated basis. read full story