Sunday, April 22, 2007

Post Corus deal scenario: Situation looks grim but.....


Until the audited financial results do not come out, nothing much can be commented on the impact of the deal. The cash flowing and NOPAT figures are what I am looking for this time.A leverage increase from 0.4 to 1.1 can only be sustained on the back of strong cash flowa nad better operational efficiency. Hope the steel markets remain bullish for this year and demand remains strong. I am also watching the movements of the chinese steel sector which from a net importer has suddenly become a net exporter.


The report from Outlook is worth going thru ( dated 22.04.2007)

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Tata Steel's shareholders, it seems, just don't like the Corus deal.
On January 31 this year, when Ratan Tata, the group chairman, announced the high-profile takeover of the British steel giant for $13 billion, the company's stock
crashed by over 10 per cent during the day's trading. Over the next nine trading sessions, it had slipped from over Rs 519 to just over Rs 432, a steady fall of nearly 17 per cent. On April 2, when British courts cleared the acquisition, Tata Steel was down 5.7 per cent. When the company announced details of how it will fund the biggest-ever M&A by an Indian firm on April 18, the scrip was down by over 3 per cent. The fall continued next day as Tata Steel lost another Rs 6.50. But since the stock has fluctuated wildly, the investors are probably both confused and unhappy. But why? A reason is that Tata Steel is part-funding the deal by raising $4.1 billion directly and indirectly.


Shareholders are piqued about ways taken to finance the Corus deal.
It has already extended $1.84 billion—from a mix of internal generation, external commercial borrowings and preferential allotment of fresh shares to parent Tata Sons—to its wholly-owned UK subsidiary. Now, it plans to raise the remaining
amount through a domestic equity rights issue, another local rights issue of convertible preference shares and a fresh issue in either an American or European stockmarket. And therein lies the problem. The investors are piqued that this will lead to an equity dilution of over 46 per cent and, impact the future earnings per share (EPS). If the EPS comes down, so should the market valuation. Agrees Sanjay Jain, senior analyst, Motilal Oswal Securities, "The market was expecting a lower dilution." While Tata Steel claims the markets are simply over-reacting, Macquarie Research, a Mumbai-based analyst firm, is confident that the funding plan is "quite positive and EPS-accretive". Another reason for the scrip volatility is the huge debt the Tatas are assuming on the balance-sheets of both Tata Steel and its UK subsidiary. Despite the equity dilution, Tata Steel's debt-equity ratio is expected to go up from the current 0.4 to 1.1 over the next 12 months. Amitabh Chakravorty, head (equities), Religare Securities, says, "A company in a commodity business cannot take on too much of debt as any downturn can lead to painfully high fixed costs." However, some analysts feel that the Tatas can still service the higher debt, dilute their equity base, and show higher EPS. One of them feels that "despite the leveraged buyout of Corus, strong cashflows over the next two years should ensure sufficient funds for Tata Steel's expansion plan and reduction of debt." Although Chakravorty has his doubts, he adds that "this is the first time an acquirer will use the acquiree's (Corus) balance sheet to pay off the debt." Also, the shareholders are still unsure about the $2.66 billion that the Singapore-based Tata Steel Asia will raise to part-finance the Corus takeover. There's a feeling that a substantial chunk of this money will either come from Tata Steel or impact its balance-sheet in some form or the other. Either way, there will be an impact on earnings and, hence, the stock price. So, once these details become clearer in the near future, the Tata Steel scrip may witness yet another downturn. Finally, Tata Steel's future depends on the global steel outlook. If demand and prices remain as firm, the Corus takeover will be a plus. If they don't, most shareholders will simply say goodbye and exit the stock.

Saturday, February 10, 2007

Musings at midnite - 10 feb 07


Tonight watching the full moon

Made my heart swoon

Isn't the carpet of stars lovely

Shining with their handome moon



The winds weave a magic

As I take a stroll

Our campus beauties

Jeans clad girls,tattoed guys

Half a dozen puppies

with their mom,dad n all;

Beck n call, beck n call...


Ahem!! anybody 2 listen

No one at all

Why?

Puppies r for mollycoddling

Till they bite ,why hear their grouse

at all!!!


In this gr8 world

All run for their moment of glory

Beck n call, beck n call u

Do we listen to our old buddies?

When they recall u.

If not today,he/she may not b there

Tomorrow for you at all!

All your inflated ego

vanishes like wisps of smoke

u weep, u yell

But alas!the deed is done ;

n u forever condemned 2 hell .







Friday, February 9, 2007

Amartya sen's insights on I.T.

Amartya Sen on I.T. AND India

The great thinker on sustainable and equitable developement of our country;Its true that IT services success story in India is like the "Baba Ramdev" model of our decade;what with its phenomenal growth and profitability.But despite the rhetoric of the global delivery model that has so enchanted the industry,I personally feel that the local community developement along with investments in basic infrastructure must be taken by these companies. Though in the short run,these initiatives do not reflect on the balance sheet ;yet in the long run they will contribute in a big way to profitability via good reputation and lower attrition.Operating on a global scale may make them feel that these CSR activities are a drain but it must be remembered that the human resource is provided by the local community ;the single most imp. factor of cost arbitrage that makes their operations viable.Each and every factor of economy is linked to each other;some apparent some not so. Those who realise the not so clear relations early on survive ;the others whither.

(source: http://www.ciol.com/content/news/2007/107020906.asp).

When the invitation came to attend this year's NASSCOM meeting and the leadership forum, I thought that this either indicated some mixing up of my identity ("wake up, wake up," I wanted to say, "I teach non-IT subjects at a university!"), or alternatively, it reflected generous interest of NASSCOM leaders to reach out (or as my students say, "hang out") beyond their principality.
Indeed, I was once asked in a gathering of very energetic and very globally minded Ugandan students - this happened at the Makerere College in Kampala - whether I, Amartya Sen, was any relation of Sun Yat Sen. I had to tell my interlocutor, "No, but we are trying hard."

It is, however, the second possibility - not identity confusion - on which I want to speak this afternoon, that is about the possibility of the IT industry to reach out beyond its principality. I want to talk not, of course, about my being here at this NASSCOM meeting, but about the case for the IT industry to bring its influences somewhat beyond what can be seen as its traditional domain.

Of course, the idea of what counts as "traditional" is hard to articulate in the case of a field of enterprise as new as information technology. Indeed, a little over a century ago, in 1885, when the Indian National Congress had its first meeting in Bombay, which was attended by among others Jamsetji Tata (he would establish his new "Swadeshi mills" next year), Jamsetji would have been, I imagine, a little puzzled if he were told that the enterprise he was pioneering would soon include a huge operation in software and IT- indeed the largest in the country (my friend Ramadorai, who heads it, is here).

The importance of information has, of course, been acknowledged over many millennia, but the ideas of IT technology and software are quintessential contributions of contemporary modernity - not something with any ageless recognition.

Indeed, the entire idea of a National Association of Software and Service Companies (that is, NASSCOM) would have appeared quite mysterious to the pioneering industrial leader of India. As it happens, the domain of IT is still evolving, and I would like to argue for taking an even broader view than has already got established.

My point is not that the IT industry should do something for the country at large, for that it does anyway. It already makes enormous contributions: it generates significant incomes for a great many Indians; it has encouraged attention to technical excellence as a general requirement across the board; it has established exacting standards of economic success in the country; it has encouraged many bright students to go technical rather than merely contemplative; and it has inspired Indian industrialists to face the world economy as a potentially big participant, not a tiny little bit-player.

My point, rather, is that it can do even more, indeed in some ways, much more. This is partly because the reach of information is so wide and all-inclusive, but also because the prosperity and commanding stature of the IT leaders and activists give them voice, power and ability to help the direction of Indian economic and social development.

Let me begin by asking a question that no one here will, I think, ask (because everyone I meet here seems so polite and well-behaved): why should the Indian IT industry have any sense of obligation to do things - more things - for India, more than what happens automatically from its normal operations (as a by-product of business success, rather than as a deliberated goal to be advanced, among other demands and necessities)? Why assume there is any obligation at all for IT to do anything other than minding its own business?

I think part of the answer lies in reciprocity. The country has made huge contributions, even though they are not often clearly recognised, to help the development and flowering of the IT industry in India, and it is not silly to ask what in return the IT might do for India.

But how has the country helped? Perhaps most immediately, the IT sector has benefitted from the visionary move, originally championed by Jawaharlal Nehru, to develop centres of excellent technical education in India, such as the IITs, to be followed by the Institutes of Management and other initiatives, aimed at enhancing the quality and reach of Indian professional and specialized education.

Despite Nehru's moving rhetoric in favour of literacy for all (which was plentifully present even in his celebrated speech on the eve of independence on 14th August 1947 - the speech on India's "tryst with destiny"), he in fact did shockingly little for literacy. I would suggest that Jawaharlal Nehru did not really think through how to ensure the practical realization of his goal of literacy for all, in which he did believe with sincerity and conviction, but not with any sense of practicality.

It was, however, entirely different as far as technical education is concerned - here Nehru's sense of ways and means nicely supplemented his fervent passion. India was not only the first poor country in the world to choose a robustly democratic from of governance, it also was the first country with grinding poverty to give priority to the development of technical skill and the state-of-art education in technology. And from this the IT sector has benefited a lot, since the entire industry is so dependent on the availability, quality and reach of technical education.

However, IT's links with India's past goes back much further than that. The nature of Indian society and traditions have tended to support the pursuit of specialized excellence in general and the development of IT in particular.

There has been a historic respect for distinctive skills, seeing it even as a social contribution in itself. Indeed, even the nasty caste system, which has so afflicted the possibility of social equity in India, has tended greatly to rely on - and exploit - the traditional reverence for specialized skill, which, in its regimented form, has been used to add to the barriers of societal stratification.

There is a tradition here that can be taken in many different directions, and it is a matter of much satisfaction that the IT industry's use of the same respect is remarkably positive and potentially open and inclusive.


Going well beyond respect for specialized skill, there is also a general attitude of openness in India to influences from far and near - of admiring excellence no matter where it is produced. This is particularly important since the IT success of India did draw initially, as indeed was inevitable, on what was going on with much accomplishment abroad.

The experiences of the Silicon valley, in particular, was very important for the yearning of skilled and discerning Indians to learn from others - and then to make good use of it.

While many Indians have a deep preference for what we can see as total local immersion and even succumb to evidently strong temptations to denigrate things happening abroad (and this attitude rears its ugly head from time to time in contemporary Indian politics as well), there has also been for thousand of years a very robust tradition here of admiring, using and learning from excellence anywhere in the world.

The IT technical experts may not readily perceive that there is a remarkable similarity between (1) their own valuational commitment to learn what they can from anywhere which has good ideas to offer, and (2) the open and welcoming attitude to departures originating elsewhere which Rabindranath Tagore articulated with compelling clarity in a letter to a friend (in a letter to Charlie Andrews in fact) in the 1920s, at the height of our struggle of for national independence:

Whatever we understand and enjoy in human products instantly becomes ours, wherever they might have their origin. I am proud of my humanity when I can acknowledge the poets and artists of other countries as my own. Let me feel with unalloyed gladness that the all the great glories of man are mine. Therefore it hurts me deeply when the cry of rejection rings loud against the West in my country with the clamour that Western education can only injure us.

It is, of course, to the credit of Western centres of excellence in education and practice that they were so welcoming to learners from abroad (I think America and Europe do not always get enough recognition for its liberal priorities in this field, despite their narrow-minded national and local priorities in other areas), but it is also important to see that the interest and initiative of bright Indians to learn from abroad for domestic use was strongly founded on an open-minded willingness to comprehend, as Tagore put it, that "whatever we understand and enjoy in human products instantly becomes ours, wherever they might have their origin."

I want to point to one further connection between the development and achievements of Indian IT and the Indian intellectual traditions on which Indian IT draws. I don't refer here only to the love of mathematics that has inspired so many young Indians throughout history, and which is important in many different ways, for the efficacy IT operations.

The general maths-friendliness of Indian intellectuals is relevant here: according to some accounts, the mathematician Bhaskara even tried to convince his daughter Lilavati that if she came to master mathematical puzzles then she would be highly popular when she went to parties, which seems to me be, to say the least, a little doubtful.

But aside from being fascinated by maths, Indian intellectuals have also typically been very excited about arguments in general: it is a subject on which I have even indulged in writing a book (incidentally, in my last trip to Mumbai I was very impressed to be offered a cut-price pirated edition of my book, The Argumentative Indian, by a street vendor near the airport, who also had the exquisite taste of explaining to me that this book was "quite good" - and from him, also "very cheap").

IT is a hugely interactive operation and in many ways Indian IT has depended on what we can call TI, that is, "talkative Indians." It is not hard to see how a tradition of being thrilled by intellectual altercations tend to do a lot to prepare someone to the challenges of IT interactions.

Given what the country has done for Indian IT, it is not silly to ask: what specially can the IT industry do for India (other than what happens automatically without any deliberate pursuit of non-business ends)? This seems to me to be right, but I would also like to emphasize that historical reciprocity is not the only - perhaps not even the most important - reason for being interested in the social obligations of the IT industry. Many considerations arise there.

There is, of course, the elementary issue of the obligation of those who "make it" vis-a-vis those who do not manage quite so well, which is a very basic ethical demand that, it can be argued, society places upon us. This raises immediately the question what any prosperous group may owe to others not so well placed.

This is not only a reflective demand for social deliberation - part of what Immanuel Kant called a categorical imperative.here is, as it happens, a very well established tradition in a part of Indian business to do just that, particularly well exemplified by the Tatas for example, through various socially valuable activities such as building hospitals, research centres and other social institutions of high distinction. I am impressed to see that many of the major IT leaders seem to be very seized of this challenge.

If that possible role is obvious enough, there is some need to understand better other roles in which the IT industry can make a very big difference in India. As it happens the key to the success of IT, namely accessability, systematization and use of information is also very central to social evaluation and societal change.

There is, in fact, a very foundational connection between information and social obligation, since the moral - and of course the political - need to pay attention to others depends greatly on our knowledge and information about them.

Indeed, already in the 1770s (more than two hundred years ago), that remarkable Scottish philosopher, David Hume, had noted the importance of increased intercourse in expanding the reach of our sense of justice. He had put the issue thus (in his chapter "Of Justice," in An Enquiry Concerning the Principles of Morals):

....again suppose that several distinct societies maintain a kind of intercourse for mutual convenience and advantage, the boundaries of justice still grow larger, in proportion to the largeness of men's views, and the force of their mutual connexions. History, experience, reason sufficiently instruct us in this natural progress of human sentiments, and in the gradual enlargement of our regards to justice, in proportion as we become acquainted with the extensive utility of that virtue.

Negligence of suffering of others is sustainable, given human interest in justice and equity, only when we know little about that suffering. More information in itself goes a long way to breaking that chain of apathy and indifference.

This foundational connection also gives the information industry a huge opportunity to help India by trying to make its contribution to the systematization, digestion and dissemination of diverse clusters of information in India about the lives of the underdogs of society - those who do not have realistic opportunity of getting basic schooling, essential health care, elementary nutritional entitlements, and rudimentary equality across the barriers of class and gender.

This can also be said about problems of underdeveloped physical infrastructure (water, electricity, roads, etc.), as well as social infrastructure, that restrain the broad mass of Indians from moving ahead. There are particular causal connections also here: an enterprise that hugely depends on the excellence of education for its success - as the IT sector clearly does - has good reason to consider its broad responsibility to Indian education in general.

I do not know enough about the IT operations to see whether all this can be turned into a business proposition as well. But my point is that even if it cannot be so transformed, it is something that the IT sector has good reason to consider doing. Can there be a group initiative in any of these fields? Can NASSCOM itself play a catalytic role here? Informational issues are thoroughly rampant in morality and politics, and in many direct and indirect ways, the preoccupation of the IT enterprise links closely with the foundations of political and moral assessment and adjudication.

Even though in this presentation I am mainly concentrating on domestic issues, I should mention in passing that the role of information and informed understanding can also be very large in the pursuit of global peace and in defeating ill-reasoned violence.

When we consider how many of the brutalities in the world today are linked with ignorant hostility to cultures and practices abroad, we can appreciate the contribution of informational limitation, among other causal factors, in cross-border belligerence. I could have talked about that too, in developing some ideas presented in my last book (Identity and Violence), but given my time limits I will resist that temptation.

I return now to the domestic scene. In emphasizing the role of the moral domain for the IT sector to feel some responsibility towards making India a more equitable country, I do not want to give the impression that there is not also a prudential case for going in that direction.

One of the huge obstacles to the domestic development of the IT sector is the size of the local market, which is still quite small, despite all the recent expansions. Indian IT has done very well in making excellent use of the global market, but competition there is likely to be increasingly fierce.

Other countries are trying to learn from the experience not only of America and Europe but also from India, and while India has some peculiar advantages in the IT field (which I have already discussed), the barriers may well be gradually removed in many countries - indeed even in many poor countries - in the world. China, which has a much larger domestic market already and will continue to expand that market very fast, is not as vulnerable as we may be, in this particular respect.

As it happens, one of the reasons for the larger domestic reach of IT in China is its much wider base of good basic schooling. So, what is an issue of equity, on one side, is also a matter of central importance for prudential reasoning about domestic economic expansion, on the other. The same goes for a much wider base of elementary health care in China, though this, as it happens, has been going through some turmoil since the Chinese economic reforms of 1979 which effectively abolished free health care for all, through insisting on privately purchased health insurance.

It is a subject on which I have written elsewhere, so I will not go further into it here, other than noting that the Chinese authorities are quite receptive now of critical scrutiny of the present system of health care that China has ended up having. This, in fact, is in sharp contrast with the past when we had made similar criticisms earlier, and I do know that very serious critical scrutiny is currently going on in Beijing on this, in a very constructive way. I expect major changes to happen in China in a more inclusive direction before long.

Excessive reliance on private health care in India for the most elementary problems of ill-health and disease (resulting mostly from the limited size, reach and operational efficiency of public health facilities) is similarly a barrier to the availability and entitlement to health care for all Indians, and this obstacle urgently needs removing.

These are all subjects on which the IT sector is well placed to provide considerable enlightenment and guidance. As it happens, the IT sector itself will indirectly benefit (for reasons I have already outlined) from playing a constructive and deliberated role in widening the base of social and physical infrastructure. But the more immediate - and also the more foundational - reason relates,

I think, to demands from the moral domain to which the IT sector has reasons to respond. This is so, I have argued, for a variety of reasons, varying from Indian IT's unequal current success and its debt to India's traditions and priorities, on one side, to - and this is often unrecognised but happens to be extremely important - the central role of information in moral reasoning, on the other.

There is indeed, I would argue, something of a socially connected obligation here, the recognition of which could make a huge difference to the future of India.

Saturday, February 3, 2007

The goods and bads of orkutting

Well,heres an interesting take on orkutting and its addictive powers. As a new technology matures, the darker sides of it soon become visible. Orkut is no exception.Nothing gr8 abt this "social newtworking concept" except that its a more transparent , public avtaar of YM. While YM offered u secrecy in who u chat with,Orkut is a free for all show.It does bring out the darker sides of our persona, with everybody trying to pose as a "tom Cruise (for guys ) " and " a salma hayek(for gals)."Only problem is that reality is different, fairies and angels are good to dream of in the skies, on earth its the humble rustics who reside.Gotta be careful while orkutting,its addictive powers are dangerous.

Heres what I got from "The happening tomorrow blog."Thanking the blog owner for useful insights :

Well i have this interesting article on Cyber stalking from the Hindu Metro plus !

I had a stalker — if that conjures up a vision of a creepy man in a ski cap peering through windows, here’s some news for you. He wasn’t even in the same city. Or even continent. And he had never seen me in his life. Yet, for about six months, I got phone calls that began at midnight and continued till 3 a.m. on both my landline and cell phone. My inbox was flooded. And my MSN messenger beeped constantly. Yet, there’s nothing particularly shocking about the episode, simply because it’s not an exceptionally unique story. Over the past few years, as people across the world begin to live their lives on the World Wide Web, online stalking has become part of life. Fortunately, most of the people you meet are geeky boys who “want to make friendships.” But among them, there are some seriously dangerous people. Vulnerable users And unfortunately, Internet users seem to forget how vulnerable they are. When the net first became popular, the numerous horror stories about the creeps and criminals online were sufficient to ensure people were wary about the information they posted. However, today, when you use the computer for almost everything, whether it’s booking buttered popcorn at the theatre or asking for advice on how to clip your Labrador’s nails, it’s only natural you get lulled into feeling secure. Getting information on others has never been so easy. There are about 200 popular social networking sites such as Orkut, Friendster, Hi5 and Facebook on which members post photographs, personal details and messages. With an increasing number of people signing up on these sites, you can never be sure of who has gone through your details, album or messages. And there is a lot of browsing done. A reasonably active profile gets about 50 hits a day. That, in real life terms, is 50 people (many complete strangers) checking you out everyday. Of course, sites like Orkut have their good points, which is why they have so many members. You can use them to find old college buddies and classmates and make new friends. Unfortunately, you’re also likely to stumble across very strange people: If you’re a woman, you’ll constantly get friend requests from men, sometimes accompanied by obscene pictures or emails. It can be annoying, and occasionally frightening. Mahua (name changed), for instance, became friendly with a stranger on Orkut because they seemed to have a lot in common. “But he gradually became obsessive, calling incessantly. There were times when I was scared but I gradually became more exasperated by the behaviour,” she says. Stating that a typical Orkut stalker is someone with “obscene amounts of time on his hands and who, because of low self esteem, takes advantage of anonymity on the net,” Mahua says that most online stalkers “are voyeurs who spend a lot of time going through profiles to try and get an idea of someone’s life.” A lot of them have multiple identities or remain anonymous. For stalkers who need some handholding, there are even online communities offering guidance and succour. Orkut, for instance, has an `Orkut Stalkers’ club with 664 members, and even a `Creepy Stalkers Unite’ community which announces “Like stalking people? Helplessly give in to your `random’ obsessions?” Discussion includes tips on “how to stalk your victim using her cellphone.” Lack of control Site moderators have little control since any user can start a community, and users multiply faster than gremlins at a swimming meet. Orkut, which began in 2004 had 30,089,043 members by October 18, 2006, according to Wikipedia. And about 20,000 people add themselves to Facebook everyday. As a result, these sites end up uniting as many criminals as they do friends. In the recent past, there has been concern about the social problems they cause: enabling child pornography, hate mongering, racism and online crimes. With dozens of new groups springing up everyday — ranging from `I love potato chips’ to `Hack the Universe’ — moderators find it difficult to weed out the bad guys. So anytime you log on, it’s possible to get anything from a `credit card hacking tutorial’ to tips on how to hack into someone’s e-mail account. However, Sonu Shankar, a U.S.-based fearless user of social networking, says as long as you’re careful, the good outweighs the bad. “People spend a large amount of time on networking sites here in the U.S.,” he says, adding that “a lot of positive networking takes place… to, say, find new members for your rock band, people who write code if you’re having problems in software development, people who’re into Italian food or people who’d help you out if your cell phone goes on the fritz.” And he doesn’t worry how much information he makes available. “Some talk about not uploading pictures owing to the threat of people modifying them and publishing them elsewhere as pornographic images. In my perspective, people ought not to care so much about it in today’s Internet age. If we were to live with such ridiculous fear, we might as well do nothing on the Internet and get back to standing in queues to pay utilities bills and buy stamps to write `Hey. I’m good. Do write back. Me.’” Staying safe Don’t ever give strangers your phone number or address. Otherwise, one night you’re likely to open your door to find an axe-murderer armed with your helpful directions on a printout. He says he looks like Brad Pitt, has a yacht and vacations in the Alps? For heaven’s sake, get a grip on reality! He’s probably some 12-year-old with braces and a wild imagination. So you’ve found the love of your life on the Internet? If you must meet him/her face to face, arrange to do so in a public place where you can yell for help if things don’t go as planned.

Tuesday, January 30, 2007

31 jan 07- A LANDMARK DATE FOR MY COMPANY


TATA STEEL - THE UNSTOPPABLE GOLIATH

Well as I sit down to write this post, I reflect on what "old economy " companies are capable of. We may all be taken by the glitz and glamour of US corporations setting shop in India, but there are companies like Tata steel which are setting shops outside heralding the arrival of the "INDIAN MNC." Uncle sam diehards, beware.
INDIANS ARE COMING.What looked like a failed venture for my company a few months back,has ben turned upside down. Starting from a lowly price bid of 450 pence, the deal was clinched at 608 pence....shows the immense strength and tenacity that went into decision making.kudos to Mr. RATAN TATA, Mr. MUTHURAN for the exemplary guts and strategy displayed. The fall in share prices was hoped fOR, the gain in synergies will soon offset the temporary glitches.
Here 's the newspaper version (THE HINDU: 31 JAN 07)

NEW DELHI: Tata Steel's successful takeover of Corus Group Plc - Europe's second largest and the world's eight-largest steel maker - has catapulted it to fifth position among world's top steel producers.

From a mere 5.6 million tonnes, the Corus acquisition will multiply Tata Steel's total production capacity to 23.8 million tonnes. The deal also leaves domestic major SAIL far behind as the state-run company has a capacity of only 13.4 MT and is ranked 1 6th in the world.

Following are the top ten steel makers (with annual production in millions of tonnes):

1. Arcelor-Mittal (Luxembourg) - 109.7 MT

2. Nippon Steel (Japan) - 32.0 MT

3. Posco (South Korea) - 30.5 MT

4. JFE (Japan) - 29.9 MT

5. Tata-Corus (India) - 23.8 MT

6. Baosteel (China) - 22.7 MT

7. US Steel (USA) - 19.3 MT

8. Nucor (USA) - 18.4 MT

9. Riva (Italy) - 17.5 MT

10. ThyssenKrupp (Germany) - 16.5 MT - PTI
------------------------------------------






Mumbai/London Jan 30 The Indian corporate world watched with bated breath as Tata Steel and Brazil's CSN entered the final lap of the race for Anglo-Dutch steel maker Corus, heading for a closed-door auction in London late Tuesday.

It is a new experience for India, as it is arguably the first time in its history that a home grown corporate is participating in this kind of auction for a global takeover.

At the time of going to press, half-an-hour before the high-profile auction, neither of the two suitors had submitted a revised offer, as was expected in certain quarters.

Both the companies, instead, got prepared to battle it out at the closed-door nine-round auction.

Suspense was also palpable at the Corus headquarters in London, as well as at the auction venue. The suspense was accentuated by the secrecy that shrouded the strategies finalised by both the companies for the bidding battle.

For, it was not just the Tata top-brass or their Brazilian competitors CSN who played their cards close to the chest while bidding for Corus. Lawyers and industry representatives involved with the final lunge to the finish line were equally tight-lipped.

Pointing out that the deal was poised sensitively, a solicitor familiar with the case told Business Line that the auction procedure varied depending on what the clients wanted.

Indicating that it would not be an auction in the traditional sense of the term, a spokesperson for the Tatas in London said that the auction process could combine both online and physical transactions, as was seen the last two times a similar auction had been conducted in the UK.

The parties involved could be at different locations and the transaction could be online or the auction could be held at a `remote' location, he said, unwilling to divulge details.

The auction method to end long-drawn bidding dramas for companies was introduced by the UK's regulatory Takeover Panel in 2002. It has since been used in two cases, in the bid for property group Canary Wharf in 2004 and when online auction firm QXL Ricardo went under the hammer in 2005.

The auction process is expected to last for about ten hours and comprise nine bidding rounds and a result is anticipated at around 0300 GMT on Wednesday morning (8.30 am IST).

Corus is Europe's second-largest steel maker and the world's ninth-largest, producing around 18 million tonnes per year

Thursday, January 25, 2007

food for thought ( 25 Jan 07)


The Hindu businesss line dated 25 jan 07

Intersting revelations:



India's influence on the world economy will be bigger and quicker than what was implied earlier, Goldman Sachs has reported.
Arguing that the country's high growth rate since 2003 represents a structural increase (rather than simply a cyclical upturn), the financial powerhouse has projected India's "potential or sustainable growth rate" at about 8 per cent until 2020.
"The recent growth spurt was achieved primarily through a surge in productivity, which we believe can be sustained. India is well-positioned to reap the benefits of favourable demographics, including an `urbanisation bonus', and a further rise in capital accumulation, in part from an upsurge in foreign direct investment," the report has mentioned.

The risk to the country's growth stems from political issues (including a rise in protectionism), supply-side constraints (including business climate, education and labour market reforms), and environmental degradation.

Productivity growth, which is driving the increase, is expected to continue over the medium term.
A turnaround in manufacturing productivity has been central to the productivity growth, it is contended
.

" These reports should not however make us complacent.Instead it should reinforce
our basic thrust on infrastructure developement and take measures to bridge the growing regional disparities."

The private sector was the principal driver of this turnaround as it improved efficiency in the face of increased competition. The underlying reasons are: increased openness to trade, investment in information and communication technology, and greater financial deepening. These factors still have some distance to run, Goldman Sachs has opined.

Here are some highlights from the report:

* India has 10 of the 30 fastest-growing urban areas in the world. Based on current trends, a massive 700 million people (roughly equivalent to the current population of Europe) will move to cities by 2050. This will have significant implications for demand for urban infrastructure, real estate, and services.

* Policies to enhance financial sector growth, openness to trade, rural-urban migration, capital formation, education, and environment — together labelled the `FORCE' factors — will be critical to sustaining growth.

* Assuming that policies to open up the financial sector remain on track, including the entry of foreign banks starting from 2009, there will be more "financial deepening". This will contribute to increases in productivity in the medium term.

* Today, India is the fastest growing market for mobile phones, with average growth rates of over 80 per cent every year since 2000.

* The success of India's elite students from IITs and IIMs masks the generally abysmal state of higher education in India. Higher education remains heavily regulated, with little to encourage private-sector participation or innovation.

Friday, January 5, 2007

Mergers and acqusitions


Heres an intersting take on Mergers and acquisitions done by India Inc.

(Source : The hindu 06 Jan06)

Newspapers are abuzz with speculation. India is emerging a vibrant player in the world of mergers and acquisitions (M&A). Not long ago, Mr Lakshmi Mittal acquired Arcelor, and had Tata Steel's bid for the Corus group of the UK gone through, it would have made the company the world's fifth largest producer. Tata Group companies and many in the information technology, pharmaceutical and banking sectors have made a host of other acquisitions. Could anybody have imagined such a showing by Indian entrepreneurs even a few years ago?

"Apart from the financial part,I think it reflects a change of mindset of our people.The Cosmopolitan culture celebrating India has truly arrived."


In many areas, India is emerging at the top. A leader in Information Technology, India was designated the third most attractive research and development centre in the world by Unctad (United Nations Conference on Trade and Development) in its World Investment Report (WIR), 2005. India is also the biggest foreign investor in the UK, outpacing even the US.
There has been a spurt in overseas investments by India.

From $0.7 billion in 2000-01, the overseas investments increased to $2.7 billion in 2005-06 and would have soared to $11 billion in 2006-07 had the Tata's Corus buy gone through; that is, it would be almost double the inbound foreign direct investments, estimated at around $5.5 billion for 2006-07. The industries that attracted Indian investments included metal, energy, pharmaceutical, IT and banking. But why M&As?
Six reasons, according to the former Ranbaxy CEO, Mr D. S. Brar, drive M&As:

Accessing new markets, maintaining growth momentum, acquiring visibility and international brands, buying cutting-edge technology rather than importing it, developing new product mixes, improving operating margins and efficiencies, and taking on the global competition. Unctad's WIR 2006 pointed out four factors that drive developing nations to go global. First, it helps market penetration. Indian multinational corporations looking for niche markets — such as IT services and pharmaceutical products — gained substantially through outbound investments.

Second, rising labour costs at home push MNCs abroad. Third, competitive pressures in the domestic economy force MNCs to invest abroad. Fourth, home government policy liberalisations stimulate outbound investments; indeed, since 2003, New Delhi has taken steps to liberalise overseas investments.

According to Unctad's WIR 2006, developing and transition economies have emerged significant outward investors, as this has become an important tool for development of the domestic economy.

`Emerging' investors


In 1990, only six developing and transition countries had made any outward investment. In 2005, the number had increased to 25. Between 1987 and 2005, the share of global M&As by MNCs from developing and transition countries rose from 4 per cent to 13 per cent in value terms, and their share in greenfield and expansion projects exceeded 15 per cent in 2005.

This buoyancy of overseas investment by the developing and transition countries is mainly because of India and China that are emerging the significant players. Happily they are not in competition as in the case of inbound foreign direct investments. Their objectives of and destinations for overseas investment are different.

Comparisons with China


Though China has also stepped up its overseas investments they are of little consequence vis-à-vis the FDI inflows into the country, which touched $60 billion. China's direct investments overseas were $6.92 billion in 2005, up 25.8 per cent over the previous year. Also, while Indian investments are northwards, Chinese investment are south-south. In 2005-06 and 2006-07, over 80 per cent of Indian investment abroad was made in the US and the UK. As much as 60 per cent of China's overseas investments flowed into Asian countries.

Though India's public sector took the lead in investing abroad, especially looking for oil assets, the private sector is now going full speed ahead, driving overseas investments. In China, state enterprises and the public sector have been the principal investors. In 2004, 80 per cent of China's outbound investments was made by state and public sector-owned enterprises. However, a major share of China's private overseas investment is tied with "round tripping" funds (estimated at 15-20 per cent), flowing from tax havens such as Hong Kong, the Cayman Islands and the Virgin Islands — the three largest destinations for outward investments.

From this perspective, India's outbound investment is more accountable in global FDI outflow than China's. India's primary motive is to increase market penetration while China's aim is to bolster its domestic industries.


Eyebrows have been raised over the rapid growth in India's investments abroad, but that should be no reason to curb them as the benefits they bring to domestic industry are many and significant.

The most important benefit that the developing and transition economies derive from outward investments is increased competitiveness. This strengthens the arms of local companies and of the MNCs to survive in a competitive milieu. Therefore, the more the domestic industries invest abroad, the more the benefits to the home economy.

(The author is Adviser, Japan External Trade Organisation (JETRO). The views are personal.)