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