Tata Corus

Topics: Corus Group, Steel, Tata Group Pages: 19 (6791 words) Published: April 21, 2013

SUBMITTED TO: Dean Dr. Badrinath Prof. K. Govindarajan



PART 1 • Global steel industry • About TATA Steel • About Corus PART 2 • Legal form • Mergers and Acquisition • Method • Terms of transaction • Valuation Matters



PART -3 • Reasons for the merger • Objectives for a merger • Culture differences • Post - Acquisition


PART 4 • Outcome of the merger – success or failure • Financial indicators • Milestones of the TATA Corus deal





PART – 1
Steel was an alloy of iron and carbon containing less than 2 per cent carbon and 1per cent manganese and small amounts of silicon, phosphorus, sulphur and oxygen. Steel was the most important engineering and construction material in the world. It was used in every aspect of our lives, from automotive manufacture to construction products, from steel toecaps for protective footwear to refrigerators and washing machines and from cargo ships to the finest scalpel for hospital surgery. Most steel was made via one of two basic routes: 1. Integrated (blast furnace and basic oxygen furnace). 2. Electric arc furnace (EAF). The integrated route used raw materials (that is, iron ore, limestone and coke) and scrap to create steel. The EAF method used scrap as its principal input. The EAF method was much easier and faster since it only required scrap steel. Recycled steel was introduced into a furnace and re-melted along with some other additions to produce the end product. Steel could be produced by other methods such as open hearth. However, the amount of steel produced by these methods decreased every year. Of the steel produced in 2005, 65.4per cent was produced via the integrated route, 31.7percent via EAF and 2.9 percent via the open hearth and other methods. At a steel mill, the crude steel production process turned molten steel into ingots, blooms, billets or slabs. These were called semi-finished products. Semi-finished products were solid blocks of steel, usually with a square or rectangular cross section. A flat steel product was typically made by rolling steel through sets of rollers to produce the final thickness. There were two types of flat steel products- Plate products and Strip products. Supply of raw materials was a key issue for the world steel industry. IISI managed projects which looked at the availability of raw materials such as iron ore, coking coal, freight and scrap. Scrap iron was mainly used in electric arc furnace steelmaking. Apart from scrap arising in the making and using of steel, obsolete scrap from demolished structures and end-of life vehicles and machinery was recycled to make new steel. About 500 million tons of scrap was melted each year. Iron ore and coking coal were used mainly in the blast furnace process of iron making. For this process, coking coal was turned into coke, an almost pure form of carbon which was used as the main fuel and reductant in a blast furnace. Typically, it took 1.5 tons of iron ore and about 450kg of coke to produce a ton of pig iron, the raw iron that came out of a blast furnace. Some of the coke could be replaced by injecting pulverized coal into the blast furnace. Iron was a common mineral on the earth‘s surface. Most iron ore was extracted in opencast mines in Australia and Brazil, carried to dedicated ports by rail, and then shipped to steel plants in Asia and Europe. Iron ore and coking coal were primarily shipped in capsize

vessels, huge bulk carriers that could hold a cargo of 140,000 ton or more. Since the World War II, the steel industry had experienced three distinct phases- growth (195073), stagnation (1974-2001) and boom (2002-2006)3. The demand for steel grew at an annual rate of 5.8per cent during 1950-73 as the industrializing nations were building their civil...
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