Indias Tata Steel Company Analysis

Indias Tata stigma Company AnalysisBy acquiring Anglo-Dutch brand name firm Corus, Indias Tata marque is now one of the worlds top five steel get finishedrs. Professor Tarun Khanna says the fact that the ken is the largest out of India and generated by the private sector makes this a notable event. scarce now comes the hard part-making the merger work. Can Tata avoid mistakes made by Chinese companies?Key concepts include* Tatas acquisition of Corus is notable not only for creating a new steel giant, but also beca theatrical role this deal was a private sector venture far from Indian government influence.* Tata should be able to make the merger work by virtue of its position of financial strength as well as previous cross-border experiences. The West should not underestimate this notwithstanding relatively unknown competitor.ContentsINTRODUCTIONTATA STEEL C0MPANY-Tata Iron Steel Company Ltd. (TISCO) is the iron and steel issue company associated with the Tata group of some 80 different industrial and other business enterprises in India, founded by members of the Tata family. TISCO operates as Indias largest integrated steel works in the private sector with a food market sh atomic number 18 of nearly 13 present and is the second largest steel company in the entire industry. Its products and services include hot and cold rolled coils and sheets, tubes, construction bars, forging quality steel, rods, structural, strips and bearings, steel plant and material handling equipment, Ferro alloys and other minerals, software for exploit controls, and cargo handling services. Through its subsidiaries, TISCO also offers tin central office, wires, rolls, refractories, and project steering services. Tata Steel was established by Indian Paris businessman Jamsetji Nusserwanji Tata in 1907 (he died in 1904, before the project was completed).CORUS STEEL COMPANY-Corus Group was created in October 1999 through the merger of British Steel and Koninklijke Hoogovens, an d consists of mills and service abideters, that produce and distribute steel products to customers worldwide.Corus service Centres, part of Corus Group with sales of over $2 meg, process and distribute products such as coil, sheet, structural sections, bar, tube, and plate products. They provide a variety of processing services such as slitting, levelling, shearing, sawing, and a concatenation of multi-step plate processes.1LITERATURE REVIEWCHANGE MANAGEMENT AND LEADERSHIPCHANGE MANAGEMENT It is a organized approach to trade with stir, both from view of an presidency and on in the individual level.This of change management assignment relates to transformation theory.As in an organization changes transform by the leader Mr.RattanTata (CEO) for the reputation and favourableness of an organization.CHANGE sticker The three stages of change that are still the basis of many approaches today.Unfreeze-The term change deposit is often used to divulge people who are unfrozen and ready to take the next step. Some people come ready for change whilst others take a long conviction to let go of their comfortable current realities.Changing-whitethorn be hard for the individual, often the hardest part is to start. Even when a person is unfrozen and ready for change, that first step can be very scary.Transition can also be a pleasant trap and, as Robert Louis Stephenson said, It is better to go hopefully than arrive. People become comfortable in temporary situations where they are not accountable for the hazards of normal work and where talking about change may be substituted for real action.RefreezeAt the other end of the journey, the final goal is to refreeze, putting down roots again and establishing the new place of stability.In practice, refreezing may be a slow process as changing seldom stop cleanly, but go more in fits and starts with a long fantasm of bits and pieces. There are good and bad things about this.2LEADERSHIPIt is the influencing process of leade rship and followers to achieve organisational objectives through change.For achievement and growth of the company, Mr.Rattan Tata change the leadership with employees.STYLE OF LEADERSHIPTransformational leadership in terms of how the leader affects followers, who are intended to trust, admire and respect the transformational leader.He identified three ways in which leaders transform followersIncreasing their awareness of task importance and appraise.Getting them to focus first on team or organisational goals, rather than their own interests.Activating their higher-order needs.3OBJECTIVES OF CHANGEThe main objective of Merger Acquisition transaction is as followsProper utilization of all uncommitted resources.To prevent exploitation of unutilized and underutilized assets and resources.Forming a strong human base.Reducing tax burden.Improving profits.Eliminating or limiting the competition.Achieving savings in monitoring cost.REASIONS FOR MERGINGFOR CORUS- core Debt Of Corus Is 1. 6 Ban Gap.Corus Needs Supply Of Raw Material At Lower Cost.Though Corus Has Revenue Of $ 18.06 Ban Its Profit Was Just Of $626 MN.Corus Facilities Were Relatively Old With luxuriously Cost Of Production.Employee Cost Is 15% plot of ground That of Tata Steel Is 9%.Tata had a strong retail and distribution network in India and SE Asia. This would make the European manufacturer an in-road into the emerging Asian markets.FOR TATA-Tata Was Looking To Manufacture Finished Products In Mature Markets Of Europe.A Diversified Product Mix Will Reduce Risks While Higher End Products forget add to bottom line.Corus Holds A Number Of Patents And RD Facility.Tata Is Known For Efficient Handling For Labour And It Aims At Reducing Employee Cost and better Productivity.It Will Move From 55th Position In World To 5th In Production Of Steel Globally.Tata was a major supplier to the Indian car industry and the demand for value added steel products was growing in this market. Hence there would be a powerful combination of high quality authentic and low cost high growth market4CHANGES-Corus legal identity was changed last November to Tata Steel Europe. Kirby Adams, MD and CEO of Tata Steel Europe. With the transition to Tata Steel name our customers have the reassurance that the technical ex annual revenue and work force of 50,000 employees Valuing the Acquisition.Method used Enterprise Value Multiple. (EV represents a companys economic value the minimum amount someone would have to pay to buy it outright)Precise and capability earned over a long and successful period will be enhanced by aligning a world-class product with a spherical leader in steel return.IMPLEMENTATION OF CHANGE MODELMarket has not responded well to this deal as the price of the stock ups fell. Investors are worried about cash outflow and the resultant strain on companys proportion sheet. Of the summarise cash to be paid in the deal $4.1 billion will be forked by Tata steel, rest of the money will be a s debts and will be returned from Corus cash flows.No merger is interpenetrate free and almost every has a bit of it. Tata steel needs to keep down on bringing down the production cost, which is high now. They need to use the best of their management skills. Rattan Tatas dexterity has worked out for the benefit of the group and this snip will be no exception. The shareholders need to keep their faith full in the group and this will pay as it has before.5AFTER unionTHE GLOBAL STEEL manufacturing-The current global steel industry is in its best position in comparing to last decades. The price has been arise continuously. The demand expectations for steel products are rapidly growing for orgasm years. The shares of steel industries are also in a high pace. The steel industry is enjoying its sixth consecutive years of growth in supply and demand. And there is many more merger and acquisitions which overall buoyed the industry and showed some good results.The subprime crisis has led to the break in economy of different Countries, which may lead to have a negative effect on whole steel industry in coming years. However steel production and consumption will be supported by continuous economic growth.6CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRYThe countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i.e. 419m ton, Japan accounts for 9% i.e. 118m ton, India accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth.The steel industry has been witnessing robust growth in both domestic as well as international markets. In this article, let us have a look at how has the steel industry performed globally in 2007.7CAPACITY-The global crude steel production capacity has grown by around 7% to 1.6 ban i n2007 from 1.5 ban tonnes in 2006. The capacity has shown a growth rate of 7% CAGR since 2003. The additions to capacity over last few years have ranged from 36 m tonnes in 2004 to 108 m tonnes in 2007. Asian region accounts for more than 60% of the total production capacity of world, backed in the first place by capacity in China, Japan, India, Russia and South Korea. These nations are among the top steel producers in the8AFTER MERGERBENEFITS-Corus well known strength is the production of high-end steel-used in construction automobile and aircraft as well as its impressive research and development will complement Tata Steel. The merger will also give it access to the important markets of Europe. All that will benefit Corus is the management expertise of the Tatas and their cost advantage in producing steel. With their acumen they will bring down the production cost of Corus. Tata Steel expects to earn $300 million per year through cost savings.Market has not responded well to this deal as the price of the stocks fell. Investors are worried about cash outflow and the resultant strain on companys balance sheet. Of the total cash to be paid in the deal $4.1 billion will be forked by Tata steel, rest of the money will be as debts and will be returned from Corus cash flows.No merger is riddle free and almost every has a bit of it. Tata steel needs to concentrate on bringing down the production cost, which is high now. They need to use the best of their management skills. Rattan Tatas dexterity has worked out for the benefit of the group and this time will be no exception. The shareholders need to keep their faith intact in the group and this will pay as it has before.9CHANGE AGENTI believe this will be the first step in showing that Indian industry can in fact step outside the shores of India in an international marketplace and acquit itself as a global player.RATAN TATARESISTANCETakeover defences include all actions by managers to resist having their firms acqui red. Attempts by target managers to defeat outstanding coup proposals are overt forms of takeover defences. Resistance also includes actions that occur before a takeover offer is made which make the firm more difficult to acquire. The intensity of the defences can range from mild to severe.Mild resistance forces bidders to restructure their offers, but not prevent an acquisition or raise the takeover price substantially. Severe resistance can block takeover bids, thereby giving the incumbent managers of the target firm veto power over acquisition proposals. A natural place to lay out the analysis of takeover defences is with the wealth effects of takeovers. There is broad agreement that being a takeover target substantially Increases the wealth of shareholders.Historical estimates of the stock price increases of target firms are about 20% in the mergers and about 30% in tender offers. The large gain for target stockholders in takeovers seems to predicate that all takeover resistan ce is bad. Resistance makes the firm more difficult to acquire. If the defence works, it lowers the probability of a takeover and stockholders are thus less credibly to receive takeover premiums. Takeover resistance can benefit shareholders. Stockholders are concerned about the market value of the firm10CONCLUSION- stopping point With Corus in its fold, Tata Steel can confidently target becoming one of the top-3 steel makers globally by 2015. The company would have an aggregate capacity of boney to 56 million tonnes per annum, if all the planned Greenfield capacities go on stream by then. We can conclude that if the acquisitions well planned, Executed and the necessary precautions taken for the deal a company can achieve its strategic objectives and thus ensure its growth through Acquisition.11REFRENCES1 www.tatabolaji.com/opinionbymihirmishra2 www.invera.com/new/corus/indexshtm3 www.tatasteel.comcompany4 www.scrib.com/doc/mergeoftatasteelandcorus5 www.barometer.edlman.comtrust/20 09/6 www.sixsigmail9.com/article.cfm7 Leading Change by John P. Katter8 Managing Change and Transition by Richard Lucked9 Change counseling by Jeffrey Hiatt and Timothy Crease10 The Change Management Pocket Guide by Kate Nelson and Stacy Aaron11 Leading Change by James OToole.12