'It's the beginning of Tata Steel's global strategy'
Hindustan Times — February 1, 2007

The man of the moment, Ratan Tata, having bagged India Inc's biggest overseas acquisition, discusses why and how the Corus deal was struck.

Excerpts:

Q.  When you made your first bid, had you any inkling of the huge hurdle you were going to face?

When we made our first bid, many thought it was an audacious move. An Indian company was making a bid for an European steel company much larger in tonnage size than itself. It was something that had never happened before.

We announced our bid last October, which had the support of the Corus management and the unions. Then we went into a long period of competitive bidding once CSN entered the fray. Many of us in the company wondered whether we would succeed or not.

The acquisition of Corus was an important strategic decision. But it was not a do or die effort. It was not a decision taken just to make Tata Steel a much larger company but an important strategic move. Corus is a unique opportunity for Tata Steel in terms of scale, its location and its culture.

I am glad we were able to win the auction. I think it is a moment of great fulfillment for all of us in India because Tata Steel as an Indian steel company now has global scale. I think it’s the beginning of Tata Steel’s global strategy.

Q. While the transaction was on, and you were facing problems, did you ever consider any alternative assets in European Market? Or you were confident you would emerge successful in the end?

We have been talking to Corus for over a year now and believe that there exists a cultural fit between Tata Steel and Corus. Both companies have similar work practices. This is of fundamental importance to the post acquisition integration process. 

When we undertake to acquire a company, we spend a lot of time convincing ourselves that the cultures of the two companies are similar because nothing can be more destructive than to have conflicting cultures.

In most of our acquisitions you will find that the management of the company we have acquired or bought into remains with the company and over time integrates itself with the Tata Group.

Q. Tata Steel increased the bid amount by over 33 per cent from 455 pence a share to 608 a share. Has the transaction cost of over $ 12 billion made you change your business plan in any way?

It would have taken us several years to build a 19-million tonne enterprise from scratch, more so in Europe. We feel confident that the affinities between the two companies are such that the synergies will be quite substantial. It will also be part of a more elaborate strategy that Tata Steel has and which is yet to unfold.

Q. Britishers built the Indian railways to take iron ore out of the country to be used for the benefit of British steel companies. Tata Steel in 2007 acquired one such company. Are you overwhelmed by the ironies of history?

I believe this will be the first step in ensuring that Indian industry can in fact go beyond the shores of India into the international market place and acquit itself well as a global player. I think Tata Steel will have a major role in creating an Indian presence in Europe.

The top management of Corus will remain with the company and therefore will be part of our integrated operations, and this in itself is an expression of faith and confidence the existing management has in Tata Steel. So I look forward to a very worthwhile union between our two companies.