Ad Here  
Need to focus on ease of doing business... Curbing steel imports will hurt small business... Four daughters and a proud father Downsizing spree... TiE applauds innovative entrepreneurs Chola MS launches motor app Hero Motocorp - smooth ride Tata Steel commence operations at Kalinganagar Holiday Inn opens in OMR Chennai IFCI to raise NCDs upto Rs 2000 crore Nothing to hide... Economic issues take a back seat at G20 summit Adding Zest to Scooty Automotive Vision Plan II... Strategy war escalates between Hero and Honda Durga - India’s largest blast furnace; now operational LVB gears to become a financial supermarket Realty sector takes a break... Gem of social service... Digital retail transactions stabilise at higher level… AirAsia India infuses funds to fight out competition Auto test tracks launched at GARC Oragadam campus An aerospace-defence cluster in Tamil Nadu… Brand leaders come forward... Placing the right shoe forward... Bridging the skill deficit in pharma industry Carrefour’s quick exit ISRO's 100th mission Blue Star plans a new plant in south Flexible labour laws… Housing Innovation Challenge, 2015 ECGC expands operations Celebration time at MS Chola Veritas Finance- financing the unfinanced Backpack laboratory Connecting the unconnected ALL to launch electric busses Applauding enterprise... Purdue and IIT-M sign the dotted line Towards peace of mind Techies trip to India When Centre visits the state Chola MS net crosses 100 crores Three more leather clusters… Pharma market dozes Industry-well poised to invest on expansion Chennai will soon get its World Trade Centre TVS Logistics – another acquisition to sharpen the business model Striking cords for 25 years… - Chennai to get a roundabout Metro ALL-two launches in a row On the ‘milky’ way SumInfra- corridor based development... Realising double digit growth in Tamil Nadu Business Breif Apple maps – finding its way Time to fast-pace the logistics sector Airlines wage price war Hyundai excites again ALL – truck industry is recovering from degrowth People Flow Day- Safety TII-challenging year with flat growth Illicit markets a concern to growing economy Is Indian telecom industry heading for a monopoly? Scoot offers just Rs.13,500 to ANZ... Waste, a gold mine More gensets and diesel engines from TAFE TN budget pragmatic and moderate on fiscal deficit Climate change may change the way businesses work... Changing dynamics in human resource management Murugappa- a year of consolidation Innovation that helped Chennai port TCS’ revenues cross Rs 100,000 crore Schwing Stetter India joins hands with US-based Gomaco Economic, business and social sustainability Rating of states to be released soon BRICS development bank Reality bytes The new look- 4s Verna Ridley marathon to India Celebrating 180 years of relevance STFC raises money Investor friendly Japan A global plastic event in India Smart controls for cooling large multi-zone spaces ... World labour laws at a glance Secured NCDs from Shriram City Research needs more funding Well-refined – RIL’s refinery margins zoom European crisis is a global crisis! Nigeria comes nearer Creating Tamil Nadu Banana brand An American alliance in the chemical industry? Steel loses its sheen Focus on self-certification and third party inspection Chennai Port is at last decongested! TII’s single largest investment at Thiruthani Make way for the new and dynamic railways Sun Edison launches solar pumps OBO Bettermann for better lightning protection Inclusive and forward moving... WABCO’s second Chennai plant CUB: towards card-less withdrawal TOP 10 CEO Compensation Indian Bank – global businesses crosses Rs 3 lakh crore... Business Briefs Indigo stays leader with 40 per cent share Big-ticket investments march towards Punjab Dynamic e-commerce scenario
Steel loses its sheen

Soon after taking over as Chairman of Tata Sons on 25 March 1991, Ratan Tata effected certain major structural reforms. He decided to focus on certain core areas like automobiles, steel, chemicals, IT and telecom. Pushing aside sentiment, he phased out activities like textiles, soaps and electronics. He also embarked on an acquisition spree of global enterprises in steel, automobiles, beverages and chemicals involving high quantums of debt. His tenure was also marked by a big boost in building the brand equity of Tatas aided by that marketing expert, R Gopalakrishnan.

His successor Cyrus Mistry has also been looking at re-structuring, rationalisation and reforms. There have been indications about vacating areas, which continued to be constrained by government controls, like fertilisers. A few months back one came across a report on Tata Chemicals’ interest to hive off its fertiliser business. Likewise, the company has also not been doing too well in its telecom business. There have been reports of vacating this sector as well.         The foray into civil aviation has also been suffering from uncertainties over civil aviation policy. The great expectations on launching the budget airline Air Asia India and the much larger Vistara set up in collaboration with the Singapore Airlines, have not been realised.  The new civil aviation policy expected soon, combined with handsome growth recorded in passenger traffic, may trigger action soon.

The recent announcement to sell the Tatas’ Corus Steel appears to be part of Cyrus Mistry’s plan to orient the group’s businesses on profitable lines.

The acquisition of Corus Steel in August 2007 for $12 billion was the country’s biggest foreign acquisition. Remember, it was the height of the boom period for the steel sector. It was rumoured that as part of the re-structuring plan of Tata in the early 1990s, even Tata Steel was considered for a phase out. There was frustration over government control with production stagnating around two million tonnes for years. But the boom of subsequent years helped Tata Steel rationalise its large workforce, embark on massive expansion at Jamshedpur and plan for capacity at new green-field sites. Post 2000, the Indian steel industry was booming with Tata Steel in the lead. Capacity increased from two million tonnes to six million tonnes and thence to 10 million tonnes. Steel companies, including SAIL, were making profits in a quarter they didn’t for years put together. So, acquisition of Corus was built on such spectacular performance for a few years in a row.

Post 2008, things changed dramatically. The global financial crisis depressed growth in the western world. Europe and Japan are still to recover from this meltdown. Cost of production in Europe zoomed. The most shattering blow came from China, which rapidly built steel capacity and today accounts for nearly half the global output. It has been selling steel at prices far lower than by others. Over-capacity of steel is slated to prevail for several years.

The decision of Tata Steel to sell off Corus appears logical and inevitable. It had already parted with a part of its assets at a nominal value of one pound sterling.

This move would release the company of the burden of pulling down  the profitable Indian operations as the capacity outside is several times more than that of India’s.

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236