Tata Steel Acquire Steel Business Of Natsteel Singapore Marketing Essay

September 4, 2017 Marketing

One plus one makes three: this equation is the particular chemistry of a amalgamation or an acquisition. The cardinal rule behind purchasing a company is to make stockholder value over and above that of the amount of the two companies. Two companies together are more valuable than two separate companies – at least, that ‘s the logical thinking behind M & A ; A.

This principle is peculiarly tempting to companies when times are tough. Strong companies will move to purchase other companies to make a more competitory, costefficient company. The companies will come together trusting to derive a greater market portion or to accomplish greater efficiency. Because of these possible benefits, mark companies will frequently hold to be purchased when they know they can non last entirely.

Tata Steel get steel concern of NatSteel, Singapore

TATA STEEL

Tata Steel is the among the top 10 steel makers in the universe. It operates in more than 20 states and has a commercial presence in over 50.

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The company was established in Jamshedpur, India, in 1907. In the past few old ages, Tata Steel has invested in Corus ( UK, renamed Tata Steel Europe ) , Millennium Steel ( renamed Tata Steel Thailand ) and NatSteel Holdings ( Singapore ) . With these, the company has created a fabrication and selling web in Europe, South East Asia and the Pacific-rim states. It has the capacity to bring forth over 30 million metric tons of petroleum steel every year.A

Areas of concern

The company produces crude steel and basic steel merchandises, and makes steel for edifice and building applications through Tata BlueScope Steel, its joint venture with Australia ‘s BlueScope Steel.

Tata Steel has besides set up joint ventures for the development of limestone mines in Thailand, the procurance of low-ash coal from Australia and coking coal from Mozambique, and the puting up of a deep-sea port in Orissa in India. The company is researching chances in the Ti dioxide concern in Tamil Nadu, India, and will shortly be bring forthing high C ferrochrome from its works in South Africa.

Location

Tata Steel is headquartered at Jamshedpur in Jharkhand, India.

NatSteel

NatSteel Ltd is a taking industrial group in the Asia Pacific with operations and joint ventures in 12 states. The group has two chief divisions: Steel and Industrial. The steel division has a regional presence in Singapore, China, Malaysia, Thailand, the Philippines, Vietnam and Australia. Singapore serves as the hub supplying R & A ; D, technology, logistics, sourcing and other support services. The industrial division is a cardinal provider of precast concrete, premix howitzer and related building stuffs in Singapore. Other NatSteel concern activities include the supply of forte and environmental chemicals, and the proviso of technology merchandises and services. For the twelvemonth ended December 31, 2003, the company achieved a turnover of S $ 1.7 billion ( Rs46 billion ) and net income before revenue enhancement of S $ 88 million ( Rs2.4 billion ) . NatSteel portions are listed on the Singapore Stock Exchange. As at shutting of trading on August 13, 2004, NatSteel ‘s market capitalization was S $ 874 million.

NatSteel is the dominant steel manufacturer of Singapore and owns steel Millss in China, Thailand, Vietnam, the Philippines and Australia. The concern is focussed on long merchandises, and has a cumulative capacity to bring forth about 2 million metric tons per annum of rebars, wire rods, pre-stressed concrete wires and strands.

About Acquistion

Tata Iron and Steel Company Ltd ( Tisco ) get Singapore-based steel company NatSteel by subscribing 100 per cent equity of its subordinate NatSteel Asia Pte Ltd ( NatSteel Asia ) .

As portion of the dealing, all steel assets of NatSteel Ltd in Singapore, Malaysia, Thailand, Vietnam, Phillipines, Australia and China ( except Changzhou Wujin NatSteel ) have been transferred to NatSteel Asia, TISCO informed The Stock Exchange, Mumbai ( BSE ) on Wednesday.

Tata Iron and Steel Company ( Tata Steel ) has entered into unequivocal understandings with Singapore based NatSteel Ltd and get its steel concern for Singapore $ 486.4 million ( about Rs 1,313 crore ) in an all hard currency dealing.

Under the footings of understanding, the endeavor value is capable to certain accommodations including those for any net debt, minority involvement, other liabilities and for working capital discrepancy relation to $ 225 million.

The acquisition besides includes a 26 per cent equity of NatSteel in Southern Steel Berhad, a 1.3 million metric ton steel shaper in Malaysia.

Advantage of Acquistion to Tata Steel company

The acquisition is a important measure in Tata Steel ‘s globalization enterprise and will move as a “ beachhead investing ” for Tata Steel in the high growing geographicss of China and South East Asia. Through this dealing, Tata Steel will increase its fabricating footmark to seven new states in Asia. The acquisition of the steel concern of NatSteel is an of import measure in Tata Steel ‘s programs to construct a planetary concern. NatSteel ‘s concern provides Tata Steel entree to identify Asiatic steel markets including China

Acquisition prove to be a good strategic tantrum and make value for Tata Steel stockholders

Advantage to Natsteel company

With this dealing, NatSteel Asia will be well-positioned to endure the volatilities in the steel industry because it will be portion of a much larger, to the full incorporate steel group with extended resources. As portion of Tata Steel, NatSteel Asia will be able to profit from a much larger footmark in the steel industry every bit good as have entree to important resources enabling them to farther expand within Asia.

NatSteel spin off its full steel concern into a entirely owned subordinate, NatSteel Asia Pte Ltd ( NatSteel Asia ) , subsequent to which Tata Steel get 100 per cent of the equity involvement in NatSteel Asia. The endeavor value of the acquisition is Singapore $ 486.4 million ( about Rupees13,130 million ) . Under the footings of the understanding, the endeavor value is capable to certain accommodations including those for any net debt, minority involvement, other liabilities and for working capital discrepancy relation to S $ 225 million.

The Corporate Advisory Group of Standard Chartered Bank was the sole fiscal adviser to Tata Steel on the dealing. Baker & A ; McKenzie and AZB & A ; Spouses were the legal advisors to the dealing while Deloitte & A ; Touche Singapore were the comptrollers to the dealing.

The Tata Iron and Steel Company Limited, an incorporate steelworker, is the largest private sector steel company in India. It is rated among the top four universe category steel companies by World Steel Dynamics. It has its ain beginnings of natural stuffs, has modern and updated engineerings and installations and has a strong client orientation. Its focal point is on the car and building industry. It has several noteworthy planetary affiliations, including those with Arcelor and Nippon Steel. It is a strong domestic participant and has a presence in planetary markets.

For the twelvemonth ended March 31, 2004, Tata Steel produced and sold 4 million metric tons of level and long merchandises entering a turnover of Rs119.2 billion ( US $ 2.6 billion ) and a net net income of Rs17.5 billion ( US $ 380 million ) . For the one-fourth ended June 30, 2004, Tata Steel reported turnover of Rs34.1 billion ( US $ 741 million ) and a net net income of Rs7.5 billion ( US $ 163 million ) . Tata Steel is presently implementing a 1 million tonne enlargement undertaking at its plants in Jamshedpur, India, which will raise its capacity to 5 million metric tons per annum by September 2005. Further enlargement to 7.4 million metric tons per annum is in an advanced phase of planning, and will be commissioned in 2008-09.

Besides steel merchandises, which include hot rolled spiral, cold rolled spiral, galvanised sheets, rebars, wire rods, and wires, Tata Steel is a major participant in India in the ferro-alloys industry with a important planetary presence. Tata Steel portions are listed on the Stock Exchange, Mumbai and the National Stock Exchange of India.

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