Merger Between TATA & CORUS

Presented By: Dharod Gaurav (FT-11)

Introduction Tata Steel

One of the worlds lowest-cost producers of steel High level of vertical integration and process improvisation, Excellent product mix and good product quality. Imported about 35% of its total coking coal requirement, effected by contract price movements.

With a low cost structure and strong balance sheet, the company can foray into the Asian markets through acquisitions.

Introduction Corus

Formed on 6th October, 1999 through the merger of British Steel and Koninklijke Hoogovens Ranked 9th in the World & 2nd in Europe High value product manufacturer Employee strength on 47,300 in 2005 Fighting to keep its productions costs under control (operating profit fall by 37% in 2006) and was on the look out for sources of iron ore

Case Study Tata Corus Acquisition

Tata Steel (2006-07) Consolidated Turnover - $ 6.31 bn Consolidated EBITDA $1.82 bn Steel Production 4.93 mt Corus (2006) 9th largest in the world with presence in 50 countries Revenue - $19.2 bn EBITDA - $ 1.35 bn Tata Steel + Corus 6th largest steel company in the world Annual crude steel production capacity Around 28 mt

Lowest cost steel producer in the world

Focus on Construction, automotive and packaging sectors Product Range Hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, construction rebars, rigs and bearings

Steel Production 18.3 mt

Focus on construction, automotive, packaging and engineering sectors Product Range Strip products, Long Products, Distribution and Building products and Aluminum

Employing approximately 82,700 employees across 4 continents Operations in 24 countries Commercial presence in 50 countries

Introduction Comparisons
Particulars
Year Assets Debt Liabilities Revenue Net Income

Corus (in Rs bns)

2006 582.7 98.1 231.3 760.5 33.9 2005 533.9 105 178.4 699.9 33.5 2004 487.8 96 155.5 596.5 -22.9

Tata (In Rs bns)

2006 205.5 45.9 30.5 202.4 37.2 2005 117.0 42 33.1 159.9 36.03 2004 147.9 39.9 32.7 111.2 17.8

Funding the Corus acquisition

Financing India's largest leveraged buyout comprised of a $3.88 billion equity contribution from Tata Steel, a fully underwritten non-recourse debt package of $5.63 billion, a revolving credit facility of $669 million. As per the acquisition plan a special purpose vehicle, a wholly owned subsidiary, called Tata Steel UK would be set up by Tata Steel

Objective of that Acquisition

To reduce Employee and Improve Productivity

It will be 5th rank automatically

Corus holds a number of patents and r& d facility

In Future Tata will become Top 10

Economic Benefits

Tata Wants Capture Global Market Tata is Low Cost Producer & Corus was a high value product Manufacture Because of this Combination of Low Cost but High Quality of Production.