Tata Steel's bid ambitious but plausible: UK media

Tata Steel's interest in its Anglo-Dutch rival Corus Group has been dubbed as ambitious but plausible by the British media.

Although Tata Steel is considered to be a "smaller Indian rival", ( its size is one-fourth of Corus), the news of the possibility of a foreigner (Tata) tighetning its hold on the European steel market has gone down well, contrary to the Mittal-Arcelor deal that got entangled in crossborder politics.

Or, the UB group's Taittinger deal, which failed even after emerging as the most attractive bid due to the political overtone in France.

The investors of Corus seem to have accepted the impending deal. The Tata Steel announcement on Thursday that it was considering acquisitions, including Corus, sent the foreign company's stock up by 18 per cent.

What makes the Tata group acceptable to Britain is a combination of factors, led by the successful acquisition of Tetley by Tata Tea six years ago.

In fact, Manchester Evening News report on the Tata Steel-Corus deal""Tetley Tea group eyes Corus for a bid""only reinforces the point.

The Guardian's industrial editor has also written that the bid for Corus would carry echoes of the Tata group's acquisition of the Tetley Tea business in 2000 - a purchase which helped propel the group to a leading position in the tea industry.

The Tatas, it appears have etched their reputation in Britain. Also, Tata Steel has carved its own identity in the global market. The company was ranked the world's best steel maker for the third time by World Steel Dynamics.

Small wonder that even Corus' trade unions are passive to the talks held between Tata Steel and the European steelmaker. Reports indicate that they were aware that talks had been held between Corus and other steelmakers.

"The statement by Tata confirms that it is another steelmaker that is conscrious of the need for consolidation in the global steel industry," the union was reported to have said.

The union's only concern is that the strategic importance of the steel industry to the UK economy was recognised and current plans of investment were carried foreard.

There is a growing consciousness that British steelmakers having been rendered uncompetitive due to high energy and ore costs. Corus, which is in the process of implementing its "Restoring Success" programme is no exception. The Independent writes that "the industrial logic of such a get-together is undeniable."

Though Tata and other Indian steel producers are planning dramatic increases in capacity over the next five to ten years, there is a short-term need for large quantities of imported steel, particularly at the added-value end of the market which Corus specialises in, " the paper says.

Tata's access to cheap sources of iron ore, in tandem with its ability to supply Corus with low-cost commodity steel, could be just what Corus is looking for, it opines.

However, not everybody has taken such a view. Financial Times, for example, has said If the two companies did combine there would be potentially a problem of uniting groups on quite different scales. Corus is the world's eighth biggest steelmaker with an output last year of 18m tonnes of steel.

Tata Steel, by contrast, is a minnow with production from its one site in Jamshedpur last year of 5m tonnes, making it the 55th biggest steelmaker in the world, according to international rankings.

An analyst working with a foreign brokerage points out that the Tata group chairman Ratan Tata had tremendous clout in Britain for his achievements. ( J J Irani, one of the trusted lieutenant of Tata was the founder chairman of Indo-British Partnership.)

Tata, 68, took over the group in 1991 when the then finance minister and now the Prime Minister Manmohan Singh opened the doors of Indian industry to the world.

"In the last 15 years, Tata has been following a two-pronged strategy whose one focal point is here in India and the other one is on overseas.

His achievements include the launch of the first all-Indian passenger car the Indica in 1998, the takeover of Tetley Tea in 2000; and the booming success of Tata Consultancy Services. And he established the group as the most socially enlightened in the country," he added.