11 May WHATS BEHIND THE TATA GROUPS MOVE TO GO GLOBAL?
The Quarterly:Last year was the first in which Asian and Indian
companies acquiredmore businesses outside of Asia than European or
US multinationals acquired within it. Whats behind the Tata Groups move to go
global?
Koushik Chatterjee:India is clearly a very large country with a
significant populationand a big market, and the Tata Groups companies
in a number of sectors have a pretty significant market share. India remains
the main base for future growth for Tata Steel
Group, and we have
substantial investment plans in India, which are currently being pursued. But
meeting our growth goals through organic means in India, unfortunately, is not
the fastest approach, especially for large capital projects, due to significant
delays on various fronts. Nor are there many opportunities for growth through
acquisitions in India, particularly in sectors like steel, where the value to
be captured is limitedfor example, in terms of technology, product profiles,
the product mix, and good management. India
actually needs a
faster pace of increased organic capacity in steel in the near future to meet
its growing demand.
3
So to pursue our
overall growth strategy, we needed to go beyond India. And as the first step,
we looked at the ASEAN1 rim for our initial acquisitions, due to the
nearness of the markets. When we acquired NatSteel Asia, headquartered out of
Singapore, in 2004, it gave us immediate access to six markets in the region,
including Vietnam, the Philippines, and Malaysia. They may not be very big now,
but these countries have meaningful populations and are on a trajectory for
growth over the longer term, making them very attractive for the future. And by
the way, these first regional acquisitions also let us test the waters of
M&A and taught us how to run a transnational business, to understand the
cultural issues, and to integrate larger organizations.
The Quarterly:How do you think about the synergies of those
smaller acquisitionscompared with larger ones, such as the recent
Corus deal?
Koushik Chatterjee:Obviously, the synergies are larger for larger
acquisitions andsmaller for smaller acquisitions. At Corus, for
example, one part of the company had very efficient operations, and the other
part had lots of potential for improvement. Tata Steel itself went through a
phase, in the 1990s, when it transformed itself into the most globally
competitive company in its sector from a not-so-competitive one. We feel that
there is a similar transformational journey ahead for Corus. Thats the work
weve been doing since the acquisition.
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