Ad Here  
January
February
March
April
May
June
 
 
Business Breif Blue Star plans a new plant in south Digital retail transactions stabilise at higher level… Steel loses its sheen Backpack laboratory BRICS development bank Business Briefs Well-refined – RIL’s refinery margins zoom Investor friendly Japan Chennai will soon get its World Trade Centre Gem of social service... WABCO’s second Chennai plant TOP 10 CEO Compensation Airlines wage price war Illicit markets a concern to growing economy Innovation that helped Chennai port Flexible labour laws… Schwing Stetter India joins hands with US-based Gomaco TN budget pragmatic and moderate on fiscal deficit Connecting the unconnected IFCI to raise NCDs upto Rs 2000 crore More gensets and diesel engines from TAFE Tata Steel commence operations at Kalinganagar Curbing steel imports will hurt small business... A global plastic event in India Automotive Vision Plan II... European crisis is a global crisis! Adding Zest to Scooty Realising double digit growth in Tamil Nadu Murugappa- a year of consolidation ALL to launch electric busses Chola MS launches motor app Bridging the skill deficit in pharma industry Striking cords for 25 years… TII-challenging year with flat growth Chola MS net crosses 100 crores Hero Motocorp - smooth ride ALL – truck industry is recovering from degrowth Three more leather clusters… AirAsia India infuses funds to fight out competition Big-ticket investments march towards Punjab World labour laws at a glance Auto test tracks launched at GARC Oragadam campus ISRO's 100th mission TiE applauds innovative entrepreneurs Durga - India’s largest blast furnace; now operational Pharma market dozes Sun Edison launches solar pumps Need to focus on ease of doing business... Indigo stays leader with 40 per cent share Is Indian telecom industry heading for a monopoly? TII’s single largest investment at Thiruthani Creating Tamil Nadu Banana brand Industry-well poised to invest on expansion An American alliance in the chemical industry? Holiday Inn opens in OMR Chennai Focus on self-certification and third party inspection Rating of states to be released soon Celebration time at MS Chola Veritas Finance- financing the unfinanced Techies trip to India Ridley marathon to India Nothing to hide... Chennai to get a roundabout Metro - ALL-two launches in a row Applauding enterprise... An aerospace-defence cluster in Tamil Nadu… Apple maps – finding its way Carrefour’s quick exit Placing the right shoe forward... LVB gears to become a financial supermarket OBO Bettermann for better lightning protection ECGC expands operations Hyundai excites again When Centre visits the state Changing dynamics in human resource management Dynamic e-commerce scenario Realty sector takes a break... Nigeria comes nearer Economic issues take a back seat at G20 summit Climate change may change the way businesses work... TVS Logistics – another acquisition to sharpen the business model On the ‘milky’ way Secured NCDs from Shriram City Waste, a gold mine People Flow Day- Safety TCS’ revenues cross Rs 100,000 crore Four daughters and a proud father Research needs more funding The new look- 4s Verna SumInfra- corridor based development... Strategy war escalates between Hero and Honda Brand leaders come forward... Celebrating 180 years of relevance Smart controls for cooling large multi-zone spaces ... Make way for the new and dynamic railways Downsizing spree... Towards peace of mind Indian Bank – global businesses crosses Rs 3 lakh crore... CUB: towards card-less withdrawal STFC raises money Chennai Port is at last decongested! Housing Innovation Challenge, 2015 Purdue and IIT-M sign the dotted line Time to fast-pace the logistics sector Scoot offers just Rs.13,500 to ANZ... Inclusive and forward moving... Reality bytes Economic, business and social sustainability
 
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 :
RELATED NEWS
ABOUT IE
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
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com