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Ladies and gentlemen, presenting Tata-Corus

It seems like a celebrity is created out of an Indian everyday in the UK these days. We, here in India, were just beginning to suppress our shock and grins from news over the new-found British celebrityhood of Bollywood starlet Shilpa Shetty on the back of a race row that news has come in today of our very own national celebrity, Tata, shooting to instant stardom in Britain by clinching the Corus deal. True, the Tatas had entered British shores with the Tetley deal a few years ago, but yesterday’s acquisition of Anglo-Dutch steel giant Corus is India’s biggest grab overseas and has surely caused many in the British and European markets to sit up and take note of India Inc’s growing ambitions.

Shocks (pleasant though) and grins all round in India on this one too as a national hero has emerged. Yes, there are some concerns on whether Tata Steel has stretched its balance sheet a bit too much in quoting a far higher price (approx $12 billion) than its original offer in October, but knowing the market standing the Tatas enjoy in India, they’re all willingly put aside.

As an Indian, I’m proud of the Tatas too and India’s growing global presence, but it remains to be seen how the Tatas will handle the responsibilities that come with being the fifth largest steelmaker in the world now. First up to demand their attention will be British workers at Corus that fear job cuts will be an inevitable side-effect of this acquisition and seem all set to challenge it. Good luck to Ratan Tata!

Poulomi Saha, India Editor

3 Comments

  1. Jamsethji Tata was the first Indian to own a car. Now the company he had started becomes the fifth largest steel producer in the world. Every Indian is proud of Tata.

  2. Anonymous

    TATA is buying CORUS with cash and is paying Indian Rupees, at time when India is looking for investments TATA’s are silently moving money that they here in India to Europe. This deal is not something that is going to be beneficial to India or generate jobs in India. On the contrary TATA’s are going to exploit Iron Ore resources from Jarkhand and Orissa and export them to the processing plants in Europe that belong to CORUS, instead of processing them in India.

    Here are some of the unpleasant side effects of the mega $12 Billion Deal. Everyone knows that TATA is one of the most influential business groups in India and even Finance Minister has publicly said that he would help TATA’s on this CORUS deal to go smooth.

    TATA spends $2.5 Billion for acquiring 21% stake in CORUS to open market. Indian Rupee instead of becoming weaker remains surprisingly steady.

    Mar 7: Corus Share holders approved the Deal
    Mar 27 : Approval comes from UK Court.
    Mar 30 : Suspension of trading of Corus shares

    Now TATAS have 14 days till Apr 16th to make the payment after the deal comes into effect.

    Even an illiterate would know that if $12 Billion of our Forex reserves are going to be moved out of the country, Rupee would become weaker and would fall dramatically but it is becoming stronger and stronger and has hit an 8year high at 42.90 against $ on Apr 4th..

    Here is how the entire Govt Machinery is facilitating in TATA’s takeover:

    RBI over a period of time is staying away from the currency market, letting rupee rise faster than earlier and thereby denting the export competitiveness of Indian Exports.

    Mar 30 : RBI announces half point hike in Cash Reserve Ratio. CRR is the portion of deposits that Banks should hold in cash. This would suck out 155 billion rupees or an equivalent of $3.5 billion from the banking system. Banks in the scramble to raise such huge cash in a short time sell their $ reserves and suck in Rupees making the Rupee stronger and stronger.

    It is everyone’s guess if RBI is tightening the banks to increase the CRR in the guise of plugging inflation or if is trying to keep the Finance Minister’s word of helping TATA on the CORUS Deal.

    The Implications of appreciating rupee and loss it caused to India Inc on its export competitiveness is an open question for economists to analyze.

    Any other views on this is welcome.

  3. Anonymous

    Information junkie seems to be stuck in 1991, when India’s forex reserves were very low. There’s millions of dollars pouring in each day, and the RBI’s worry is keeping the rupee down, not bringing it up.

    Your information too seems to be dated. The Tatas are foremost in the demand that export of high-quality ores from India should be banned. That demand has not changed after the Corus acquisition. There will be no export of ore to Corus from India.

    Corus is not Tata’s only expansion plan. The company is putting up three new integrated steel plants in India to triple its raw steel output, for which it needs ore and coal reserves.

    Wake up, and keep up with the world!

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