TATA & CORUS Deal

British Steel merged with the Dutch steel producer Koninklijke Hoogovens
to form Corus Group on 6 October 1999 forming the third largest producer
of steel behind POSCO of South Korea and Nippon Steel of Japan. About
TATA steel, it is one of the lowest cost producers in the world. They have a
strongest retail network in India and
South East Asia and Corus has a
largest network in Europe and UK.
According to the financial report of
Corus in 2006 there PAT was almost
half of the previous year. In 2004
they generate £441million, in 2005
the
PAT
was

£451million and in 2006 it was just £229 million so this might be one of
the major reasons for sell. On January 30, 2007, Tata Steel purchased a
100% stake in the Corus Group and the deal is the largest Indian takeover
of a foreign company and made Tata Steel the world's fifth-largest steel
group.
In 2009 Steelmakers around the world have been hit by falling demand
from carmakers, shipbuilders, construction and heavy engineering
sectors, which, in turn, have seen demand for their products drops. A 40%
fall in global demand for steel from its peak of last year caused Corus's
order book to drop by more than a third and steel prices have fallen by
half since last September 2008. So Corus is cutting 3,500 jobs, primarily in
Britain and in the Netherlands, in a move accelerated by the global
economic downturn.
Here we can clearly seen the cycle starts with poor performance in 2006
in the existing market which led CORUS to sell their business then some
temporary improvement results in the end of 2007 by getting some new
order but again due to economic downturn they have to cut resource by
reducing the factor of production i.e. cutting the jobs of 3500 employee.
This cycle goes on and on.
Mr. GOUTAM DASH
Regd No. 1224108128
GITAM INSTITUTE of INTERNATIONAL BUSINESS
MBA (IB) 2008-10