Description
ACQUISITION OF CORUS AND TATA STEEL
• Grasping for the company simply because its on the market, or because competitor wants to buy • Overpayment Or misguidance • Inability to integrate well • Diverse business Or unmanageable • Leap without looking at the value
Profile of TATA Steel
• Vision:- “we aspire to be global steel industry benchmark for value creation & Corporate citizenship” • Global presence in South East Asia, China, Australia • It acquired Natsteel Singapore for $486.4 Million • It bought 67% stake in Thailand based Millenium Steel • Low cost producers in the world • Strong retail & distribution network in India & South east Asia
Profile of pre merger
TATA STEEL
102 years in steel Bazaar Presence in 26 Nations Capacity 30 Million Worlds 56th largest Founder J N TATA
Corus
Worlds 6Th largest Presence in 50 Nations 371 rank in fortune 500 list 2nd in Europe, No.1 in UK 40,000 workforce worldwide
Synergies of Operation
• Significant cost of saving Expected by exporting Cheaper input (slabs) • Combined entity emerge as second most geographically diversified • Synergy result from sharing manufacturing practice, shared services and purchasing • Also sharing complementary strength • Strong R&D & product development capabilities for value added products in Auto, construction & packaging (which compliments growing markets such as Asia)
Corus J P Morgan Cazenovt HSBC
TATA STEEL ABN Amro Deutche bank Standard chartered bank
Five year Financial Performance of TATA
Category Production Revenue Unit ‘000 MT $In Millions 2002 3.636 1583 03 3.941 2150 04 4.089 2755 05 4.109 3532 06 4.552 3884
EBIT
$In Millions
283
20 52 43 3 .96
516
27 277 222 12 34
840
34 616 404 16 156
1378
42 1178 773 24 528
1401
40 1187 794 23 529
EBIT MARG % PBT Net Profit Net profit margins EVA $In Millions $In Millions % $In Millions
Five year Financial Performance of CORUS
Category Production Revenue ($) EBIT ($)
Unit ‘000 MT In Millions In Millions
2002 17.1 11456 512
03 19.4 10018 305
04 19.5 12165 1251
05 18.7 10845 1142
06 18.8 12845 1846
EBIT MARG PBT ($)
Net Profit ($) Net profit margins
% In Millions
In Millions %
-4.47 -644
-741 -6.47
3.04 -321
-388 -3.87
10.28 766
593 4.87
10.53 649
512 4.72
14.37 610.35
446 3.47
Company Turnover EBITDA PBT PAT NP Margins EPS Dividend
TATA ($) 4546 1704 1440 971 23.1% 1.70 254
CORUS ($) 18979 1846 610.35 446 2.35% .41 134
EVA Calculation pre & post merger
Particulars Risk free rate Market Premium Assumed Beta Cost of Equity Equity Cost of debt After cost of Debt Debt 2006-07 8.00% 6.50% 1.12 15.28% 37.03% 8.0% 5.28% 63% 2007-08 5.27% 9.00% 1.5 18.77% 35% 8.0% 6.0% 65%
WACC Capital Employed
Net profit Total weighted cost EVA
8.98% 42074.75
4165.61 3778.313 387.297
10.4695% 92161.62
12321.76 9648.861 2672.9
Particulars EBIT PBT (in Crores) PAT (in Crores) PBT (Turnover) Interest Coverage ratio EPS Debt/Equity P/E
2006-07 31.14% 6313 4165 24.61% 16.35 64.66 0.71 6.95
07-08 14.08% 16371 12321 12.39% 3.46 177.18 1.99 3.91
08-09 12.55% 6743 4849.24 7.43% 4.32 66 1.65 3.12
“we had taken a view that we wouldn’t go beyond a point. We didn’t reach that point .If we reached that point we would walked away. over bidding (or) not is subjective when it comes to judgment class”.
Questions?
Thank You
doc_547427816.pptx
ACQUISITION OF CORUS AND TATA STEEL
• Grasping for the company simply because its on the market, or because competitor wants to buy • Overpayment Or misguidance • Inability to integrate well • Diverse business Or unmanageable • Leap without looking at the value
Profile of TATA Steel
• Vision:- “we aspire to be global steel industry benchmark for value creation & Corporate citizenship” • Global presence in South East Asia, China, Australia • It acquired Natsteel Singapore for $486.4 Million • It bought 67% stake in Thailand based Millenium Steel • Low cost producers in the world • Strong retail & distribution network in India & South east Asia
Profile of pre merger
TATA STEEL
102 years in steel Bazaar Presence in 26 Nations Capacity 30 Million Worlds 56th largest Founder J N TATA
Corus
Worlds 6Th largest Presence in 50 Nations 371 rank in fortune 500 list 2nd in Europe, No.1 in UK 40,000 workforce worldwide
Synergies of Operation
• Significant cost of saving Expected by exporting Cheaper input (slabs) • Combined entity emerge as second most geographically diversified • Synergy result from sharing manufacturing practice, shared services and purchasing • Also sharing complementary strength • Strong R&D & product development capabilities for value added products in Auto, construction & packaging (which compliments growing markets such as Asia)
Corus J P Morgan Cazenovt HSBC
TATA STEEL ABN Amro Deutche bank Standard chartered bank
Five year Financial Performance of TATA
Category Production Revenue Unit ‘000 MT $In Millions 2002 3.636 1583 03 3.941 2150 04 4.089 2755 05 4.109 3532 06 4.552 3884
EBIT
$In Millions
283
20 52 43 3 .96
516
27 277 222 12 34
840
34 616 404 16 156
1378
42 1178 773 24 528
1401
40 1187 794 23 529
EBIT MARG % PBT Net Profit Net profit margins EVA $In Millions $In Millions % $In Millions
Five year Financial Performance of CORUS
Category Production Revenue ($) EBIT ($)
Unit ‘000 MT In Millions In Millions
2002 17.1 11456 512
03 19.4 10018 305
04 19.5 12165 1251
05 18.7 10845 1142
06 18.8 12845 1846
EBIT MARG PBT ($)
Net Profit ($) Net profit margins
% In Millions
In Millions %
-4.47 -644
-741 -6.47
3.04 -321
-388 -3.87
10.28 766
593 4.87
10.53 649
512 4.72
14.37 610.35
446 3.47
Company Turnover EBITDA PBT PAT NP Margins EPS Dividend
TATA ($) 4546 1704 1440 971 23.1% 1.70 254
CORUS ($) 18979 1846 610.35 446 2.35% .41 134
EVA Calculation pre & post merger
Particulars Risk free rate Market Premium Assumed Beta Cost of Equity Equity Cost of debt After cost of Debt Debt 2006-07 8.00% 6.50% 1.12 15.28% 37.03% 8.0% 5.28% 63% 2007-08 5.27% 9.00% 1.5 18.77% 35% 8.0% 6.0% 65%
WACC Capital Employed
Net profit Total weighted cost EVA
8.98% 42074.75
4165.61 3778.313 387.297
10.4695% 92161.62
12321.76 9648.861 2672.9
Particulars EBIT PBT (in Crores) PAT (in Crores) PBT (Turnover) Interest Coverage ratio EPS Debt/Equity P/E
2006-07 31.14% 6313 4165 24.61% 16.35 64.66 0.71 6.95
07-08 14.08% 16371 12321 12.39% 3.46 177.18 1.99 3.91
08-09 12.55% 6743 4849.24 7.43% 4.32 66 1.65 3.12
“we had taken a view that we wouldn’t go beyond a point. We didn’t reach that point .If we reached that point we would walked away. over bidding (or) not is subjective when it comes to judgment class”.
Questions?
Thank You
doc_547427816.pptx