preview

Case Study Of Tata Steel And Corus Group

Decent Essays

Tata Steel acquired Corus Group in April 2007 for £6.2bn. Tata Steel is India’s largest private sector steel company with 2005/06 revenues of US$5.0 billion and crude steel production of 5.3 million tons across India and South-East Asia. Corus Group is Europe's second largest steel producer with annual revenues of over £9.2 billion and a crude steel production of 18.2 million tons in 2005. This is an interesting acquisition as the acquired company was almost four times the size of the acquirer in terms of revenue. The combined entity became the fifth largest steel company in the world. The acquisition allowed Tata Steel entry into the European market. This deal follows the merger of Arcelor-Mittal forming world’s largest steel company. It is the biggest deal ever from an emerging market. The deal is a powerful combination of low cost upstream production in India with the high end downstream processing facilities of Corus. The deal occurred through 9 rounds of competitive bidding between Tata Steel and …show more content…

In 2014-15, the share was down to 57.3 percent. While Tata Steel group witnessed a 6 percent growth in turnover over the period, Tata Steel Europe saw a 20 percent decline in turnover. Clearly, Tata Steel Europe has been a drag on the group. As far as operating profit is concerned, Tata Steel group saw a decline of 30 percent between 2007-08 and 2014-15. Tata Steel Europe, meanwhile witnessed a sharper 53 percent decline. In 2007-08, a year before the global financial crisis started, the foreign subsidiary had a 50 percent contribution to overall Ebitda. The business never went back to that level of operating profit after that. The share in 2014-15 stood at 33.6 percent. In 2015-16 up to December, the group's consolidated EBITDA stood at Rs 11,165 crore. Tata Steel Europe, meanwhile, reported an operating loss of Rs 339

Get Access