Exuberant after a thriller deal to acquire steel giant Corus for $11.3 billion, Tata Group supremo Ratan Tata dubbed the victory as 'a moment of fulfilment for India'.
MUMBAI: Exuberant after a thriller deal to acquire Anglo-Dutch steel giant Corus for $11.3 billion, Tata Group supremo Ratan Tata on Wednesday dubbed the victory as 'a moment of fulfilment for India'.
"This will prove to be a visionary move...," Tata told reporters within hours of Tata Steel making a winning bid of 608 pence a share for Corus to trump Brazilian CSN that would elevate the group company to the world's fifth largest steel entity.
At the same time, he took a dig at the critics, saying: "When we launched the bid for Corus, many thought it was an audacious move, because an Indian company taking over an European company much larger in size has not happened before."
He said Tata Steel would become a global scale player with footprint in Europe to become "the fifth largest steelmaker in the world," while announcing that the present management would be retained and Corus would be integrated with Tata Steel.
This has demonstrated that Indian industry can step outside of India in the international market as a global player, he said.
"I have always believed that if you want to become a global company, you have to dismiss your notion of being a single nationality," Tata said.
On Tata Steel share prices taking a hit on Wednesday, Ratan Tata said the market was "taking both a short-term and a harsh view. We often damn a company when it makes loss in a year...hopefully in future it (market) will look back and say it (acquisition) was a right move."
Tata Steel Managing Director B Muthuraman termed the acquisition as part of the company's strategic planning, saying it planned for greenfield capacity where raw materials were available, while looking for acquisitions where there was market like it did in taking over NatSteel and Millennium in Singapore and Thailand, respectively.
He agreed that nine times the EBIDTA margin quoted by Tata for Corus was a bit higher by industry standards, but the company would benefit from significant synergies although it would take three years to fructify.
Muthuraman said the company was looking at a synergy of $300-350 million a year.
Lauding the deal, Muthuraman said it is a very important and significant step for the company and the country.
"India has a tremendous future in the steel industry and potential in many areas in which we could be world leaders," he said, adding the deal would bring 19 million tonne per year capacity into the Tata Steel basket.
The deal has given the company access to developed markets of Europe and the company plans to go downstream in the European markets than the emerging economies.
Muthuraman said Corus has high capabilities which will derive more value from existing capacities of Tata Steel.
After the formalities get over, which is expected to take take three to four months, executive committees and task forces would be created for facilitating integration with group companies, he said.
The company has identified several synergies in procurement of materials, improvement of operations in the market place and practices using Corus's abilities to bring improvement in operations in India.
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