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Samrat Chakraborty Roll no. PGDM/10/024

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TATA-CORUS Tata acquired Corus, which is four times larger than its

size and the largest steel producer in the U.K. The deal, which creates the world's fifth-largest steelmaker, is India's largest ever foreign takeover and follows Mittal Steel's $31 billion acquisition of rival Arcelor in the same year.

Tata acquired Corus on the 2nd of April 2007 for a price of $12 billion. The price per share was 608 pence(rs 484), which is 33.6% higher than the first offer which was 455 pence.

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We aspire to be the global steel industry benchmark for value creation and corporate citizenship

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Tata Steel a part of the Tata group, one of the largest diversified business in india.

Founded in 1907, by Jamshed Ji Nusserwanji Tata. In feb 2005 acquired singapore based Natsteel Ltd. In dec 2005 acquired thaialand Millennium steel .

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Indian Steel Industry Cycle

8th largest steel producer in the world

Production of Finished steel in 2005-06, 42.7 mT, a growth of 11%.

Apparent Consumption of Finished Steel in 2005-06 - 38.1mT, growth of 10.8%. Apparent consumption of Longs -16.2 mT, Flats - 21.8 mT.

Largest producer of Sponge Iron - 12.8 mT in 2005-06 (a growth of 25%).

India’s exports of Finished Steel in 2005-06, 4.4 mT, Imports 3.7 mT

Huge Iron Ore reserves – 23 bn. tonnes

Private Steel Producers are opting for Forward as well as Backward Integration

Indian Steel Producers are increasingly looking for overseas acquisitions in steel as well as raw materials.

Indian Steel Industry – An Overview

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10

15

20

25

30

35

40

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1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005

INDIA’S CRUDE STEEL PRODUCTION (MT)HISTORIC TRENDS

* Year indicates FY

SLOW GROWTHMODEST GROWTH

HIGH G

ROWTH

Enabled by India’sEconomic liberalization process

India gains independencein 1947

6.6 mT in 1973

16.2 mT in 1991

1.25 mT in 1948

41.3 mT in 2005

SAIL22%

Others40%

RINL7%

Tata Steel9%Essar

8%Ispat6%

JSWL8%

Company 05-06

(MT)

SAIL 9.15

Tata Steel 3.8

RINL 3.0

ESSAR 3.3

ISPAT 2.6

JSWL 3.5

OTHERS 17.2

Total 42.7

Finished Steel Production 2005-06

Major PlayersIndian Steel Industry – An Overview

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Company Capacity(in million tonnes)

Arcelor - Mittal 110

Nippon Steel 32

Posco 30.5

JEF Steel 30

Tata Steel - Corus 27.5

Bao steel China 23

US Steel 19

Formed on 6th Oct 1999, through merger of 2 companies : British Steel and Koninklijke Hoogovens.

Consist of four divisions : Strip products, Long products, Aluminum and Distribution, Building system

Operates as an International company Core business in Manufacturing, Development and

Allocation of Aluminum and Steel products and services Wide variety of products and services Largest steel producer in UK with £10,142 million

annual revenue and work force of 50,000 employees

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Higher profitability Global No. 5 company By 2012, expected production of 40 million tonnes

giving it the position of Global number 2. To gain access to global steel market and expand

production capacity to keep pace with growing demand for steel

Jim Leng, Chairman of Corus“This offer from Tata Steel reflects the substantial value created for Corus shareholders

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TATA looking for mature market in Europe for its finished products

Corus holds a number of patients and R & D facility.

Cost of Acquisition lower than setting up a green field plant and marketing and distribution channel.

Corus wanted to reduce its employees cost and TATA is well known for handling its labours efficiently.

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Officially announced on April 2nd 2007.

TATA’s motive is to capture the market value.

Total value of this acquisition was $12 Billion (608

pence per share except 603 per share).

Corus gained profitable opportunity to exit and a buyer

for some time.

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Sep 20, 06 : CORUS uses the strategy to work with low cost producer. Oct 06, 06 : Initial offer by TATA is considered to be too low. Oct 17, 06: TATA kept its offer to 455 pence per share. Oct 20, 06 : CORUS accepts the offer of £4.3 billion. Oct 23, 06 : Brazilian Steel Group CSN counter-offer to TATA’s offer. Oct 27, 06 : CORUS criticized by JCB for acceptance of TATA’s offer. Nov 18, 06 : The CSN approaches Corus With an offer of 475 pence per

share Nov 27, 06 : Board of Corus decides to give more time for shareholders to

decide whether it issue forward a formal offer. Dec 18,06 : Tata increases its original bid for Corus 500 pence per share,

then CSN made its counter bid at 515 pence per share in cash Jan 31, 07 : Tata had agreed to offer Corus investors 608 pence per share

in cash Apr 02, 07 : Tata steel manages to win acquisition to CSN and has the full

voting support from Corus shareholders 15

Seven member team for this DEAL.

TATA has to pay $12 billion, where 2/3rd was being

financed.

After the bidding conflict with CSN, TATA ended up

paying more to CORUS.

Still TATA earned operating profits of $840 million on

sales of 5.3 million tonnes of steel, while CORUS earned

$860 million on sales of 18.6 million tones of steel.

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Strength◦ Lowest cost producer in world.◦ Experience of TATA group in doing global activity.◦ Stable balance sheet (Low Debt to Equity Ratio).

Weakness ◦ Corus was triple the size of TATA steel in terms of production.

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Opportunity◦ Consolidation trend in Steel Industry◦ CSN’s lost image after failure of 2002 negotiations◦ To get exposed to global steel market

Threat◦ Brazil company CSN ◦ Russian company Severstal◦ No committed financers to support the possible deal

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TATA Steel posted a consolidated net loss (including Corus) of Rs 2,209 crore ($461 million).

Incurred a profit of Rs 3,901 crore ($814 million ) in the April-June quarter of FY’09.

Sales volume of Indian operations was higher by 22 percent but sales from its European operations (Corus) fell heavily.

Group consolidated turnover was Rs.23,292 crores as compared to Rs. 43,496 crores.

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The merged entity aimed that at transferring European Technology & the expertise of the R&D of CORUS to India to develop new Product & Capture Growth In India & Other Parts of Asia By the Year 2015

Tata stell got access to the developed market of Europe .It Gives access to developed and mature market of Europe Where Tata can go downstream much more than in India and Chaina and where the quality product & service is important

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“ I believe this will be the first step in showing that Indian industry can step outside the shores of India in an international market place and acquit itself as a global player”

- Ratan

Tata

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Thank you

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