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

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