Friday, February 02, 2007

winners curse.. or is it???

The Tata’s finally acquired Corus in the biggest acquisition by an Indian firm ever. The company stock however took a nosedive with the general consensus being that the company overpaid and thus would now have to bear the “Winners Curse”. The final price of 608p is much higher then the initial bid of 455p and this by all accounts appears an audacious price to pay for a company barely profitable. However here lies the catch, Tata groups overseas acquisition strategy is based upon the acquiring underperforming assets and then turning them around , they have successfully demonstrated their operational capabilities in the past by turning around Tetley, Nat steel etc to name a few. Moreover although the group officials deny it this deal was much more then a mare overseas acquisition for the Tata’s, consider this :
· Tata Steel is now the fifth largest producer of steel globally
· Tata group is the largest industrial group in India in terms of revenues, ahead of Reliance.
· The group has effectively shed the tag of being very conservative

The Corus deal has also fundamentally changed the steel industry by giving a major boost to the consolidation wave. With the consolidation process now on a roll the steel companies might be in for a fundamental re rating.

I for one remain confident of the long term benefits of this deal for the shareholders as Mr Tata says-“corporations live much longer…” , it’s a masterstroke from arguably the wisest businessman in India today. Don’t forget that he gave India its first home made car (the Indica) when very few gave him a chance... As he said in one of the interviews “I am a risk taker, not a gambler.” This may go down in history as his best moves or may be it won’t but one thing is certain it would certainly be registered in history amongst the most bold moves by India inc..

Thursday, February 01, 2007

of pepsi, coke and cars...

Placement week is right round the corner now and the season for pre placement talks is in full swing. Apart from the number of companies, interesting roles (and of course the money.. J) I notice an interesting trend amongst companies who come to campus with a host of goodies … to tell you what I mean Pepsi and Coke brought along large supplies of soft drinks and a large refrigerator containing the soft drinks was installed right outside the venue for the company presentation. Well not all companies make products that can be consumed by everyone so Hero Honda became more innovative and actually showcased the latest models of their motorbikes ( yeah we had a Karizma and CBZ etc displayed right outside the venue)… you cant take them with you though L… HLL was by far the most different of the lot , they actually sent a toy car for each student, now don’t ask me the rationale since the company neither makes cars nor any products related to cars… However the best and most innovative by far was Anand Bazaar Patrika (ABP) a media house which publishes Business World and many other titles. Each student received a personalized mailer from the company containing a CD titled “Corporate-II”, the cd inside had this printed on it- “ Blank CD ready to write your success story”, ever seen a better example to create brand recall… I am sure I have not been able to cover all the companies but the broader theme seems to be that companies are keen on creating a strong brand image on campus and for the students the goodies are rolling and no’ones complaining… in fact I gather that some people are anxiously waiting to see the makers of kingfisher or stross on campus J