General and Application Controls in Information Technology

Information Technology has answered our many problems. It has made the life of individuals, groups and organization very easy compared to the former years where technology was something in dreams or on paper. Information Technology is referred to the various sophisticated and state of the art technology like computers that help us to manage our businesses (Senn, 2003).The most important part of the business for example is their huge amounts of data, the problem of storing them and then retrieving them for a useful purpose. Companies realize that data should never be treated as a useless collection of numbers, no matter how old they are. They also came to an appreciation that data can be used to give the companies the competitive edge they need, especially after they became conscious about the â€Å"marketing paradigm†.The Information Technology helps these companies to create, process, store, protect, transmit and retrieve data (Senft & Gallegos, 2008). Besides these, Informat ion technology has helped give impetus to the globalization process. It has reduced the world to a global village where the communication problem is no more an issue, especially after the advent of the internet. Now you can even make calls using the internet. All you need is a microphone and speakers to talk to anyone, at any time sitting anywhere in the world.The companies also realize that there processes (that take place within their organization to come up with their products) have become more cost effective (Senn, 2003). This has allowed business to efficiently utilize their resources and probably the most important one (which is usually saved at the end of the process) is the time. Through technology, companies are able to enhance the quality of their products and processes.BACKGROUNDGeneral Control of the Information Technology aids to guarantee the consistency of the data. This means that the data being produced is showing the performance of the system that you have installe d, and that it is producing the desired results. It ensures that the machine is working perfectly fine. You can then check upon your business process if there is an anomaly or inconsistency in your data. You can be sure of the right data for the wrong processes.Thus you can improve upon your business processes to correct your data. General Control of Information Technology usually encompasses the environmental control (Senft & Gallegos, 2008). This means that you understand the extent of the outside environment or the system beyond the boundary of your system and clearly out of your hands does shape your business in a certain way. But in what way does it affect you depends on the various environmental control you have at hand.USES AND IMPLICATIONSThe General Control also focuses on the different management changes that are brought within the business system or environment. Changes are a verily a very stressful task with in the organization.Information Technology helps to make sure t hat the changes brought therein is acceptable with the norms, organizational culture and the rules and regulations of the business itself (Senft & Gallegos, 2008). During the life of the business, many programs (complex or simples) are written to help businesses achieve their desired results.For example a company may find itself in the need of a Data Base Management Systems or a Data Warehouse. They may either purchase it or they may build it themselves. In both the cases, the company needs to mould the coding to suit their business requirements. It helps the source code’s reliability within the program.Businesses work on projects. For advanced business and for businesses that care to expand in the long run, find themselves in the need of developing software or systems. On the other hand, software houses whose main business is to develop and sell customer’s customized softwares goes through a complex life cycle to design, develop, test, implement and maintain the softw are.General Control helps to achieve that too. It helps to simplify the whole cycle which may extend to a number of years depending on the size and complexity of the software (Turban, Leidner, McLean, & Wetherbe, 2007).

Retailing in China

Therefore, the aim of the present study is to work out a high-level plan of successful localization trainees. By analyzing the status quo of Chinese retail market and the current situation of transnational retailers in China (including the case study of Careful), this paper explores how consumer behavior, culture and government roles can affect the localization strategy and creates a list of formats for successful localization strategies. The paper proceeds in four sections.First, the concept of retailing localization (3 layers of localization) is Introduced as an antidote to the deficiencies of the prevailing study approaches to transnational retailing. One background sections hen follow. While the first part charts the status quo of Chinese retailing market and the rapid growth of transnational retailing, the second profiles the opportunities and threats transnational retailers face in the process of localization.Then, by studying the case of Careful (China), the strategy analysis of localization in China for transnational retailers is profiled, including the analysis of the 3 layers of localization – namely localizing the strengths, localizing the products and operational system (ups) and localizing management and corporate cultural (PEP). Finally, the wider implications of this study for transnational retailers in the process of localization are put forward in the concluding section. 1. Introduction 1. 1 The Problem and the Study Objective Admit it or not, the relationship between transnational giant retailers and China has become a love-hate one.On one hand, China Is virtually any retailer's largest opportunity for growth In the 21 SST century. With its booming economy, fast growing domestic markets and untapped talent base, China offers massive business opportunities and great strategic importance for retail companies all over the world. A large and growing consumer base of 1. Billion people. National retail sales reached some 837$ billion in 2005 with an increase of 12. 9% over 2004 It is estimated that national retail sales will exceed some 1250$ billion in 2010. Source: http://www. Showbiz. Com. CNN/ SMS. PH? Org=show=33431 =l On the other, China's unique cultural, business, and political environments pose significant challenges to transnational retailing operations that require a high degree of localization. Based on the fact that the localization of retailing Is much more complicated and comprehensive than other Industries, retailers usually find themselves puzzled and bewildered 1 n China. Indeed, many retailers have fallen prey to these challenges in the past 10 years AT operations In canal toners nave Eden unrolling extreme narrators In ten process of localization.The concrete causes of their problems vary. However, one common underlying characteristic is that they all, to some extent, failed to conduct successful localization strategies. The initial objective of this paper is to look at the problems retailers have en countered and explore the flaws in their localization strategies. The present study has one more objective: to work out a solution to a racial problem about how the transnational retailers can deal with the socio- cultural differences in China and conduct successful localization strategies.On the surface, these challenges appear difficult to overcome; yet, when we study the case of the multinational retailing corporations operating in China today, it is evident that some have achieved exceptional success based on their well-developed localization strategies. The experiences of these successful companies can be mined to create a list of formats which can help diagnose localization blunders of transnational retailers in China. Thanks to my internship experience with Chuan as Sale Management Trainee, I have been able to investigate retailing operations as an insider and had more profound understanding on this study. . 2 Current Study The uniqueness of Chinese retail market and the high demand of localization for retailing industry both in degree and content, make the research on the localization of transnational retailers in China an extremely interesting and meaningful one. While many previous researches have been focused on the localization of transnational corporations, only a few have explored the localizing strategies of retailing operation. Therefore, it is not an easy task to study the localization of retailing operations.However, by referring to those previous studies in relating fields, I have been able to explore deeper about this subject. The study of this paper is based on a mixture of primary and secondary sources. This material is supported by critical examination of longitudinal data from annual reports, company documents, as well as scientific work of business magazines and web site. 2. Localization 2. 1 The Definition of Localization When a company conducts global expansion, it is surely to be involved into the process of communication with local customers.It is therefore necessary for the company to get familiar with local culture, to study different customs, and to make proper adjustments to their strategies according to the varied response of customers. The executive of Careful once said 2 when doing market research in China that, â€Å"A store is a miniature of the country or city it locates in, so it should be adapted to the local environment. † There are many definitions on localization from different angles. Some of them are based on cultural and linguistic context, some focus merely on localizing the products.However, as for he definition of retailing localization which is a highly territory-embedded process, more practical and multidimensional view is required. Definition based on culture context According to the Localization Industry Standards Association (LISA), localization Involves: ‘alkali a product Ana making It linguistically Ana culturally appropriate to the target locale where it will be used and sold. ‘ 2. 3 Three Layers of Localization for Transnational Retailing 2. 31 Two Misconceptions of Localization A. When talking about localization, people usually focus merely on product or service.Nevertheless, a successful localization strategy for retailing is much more complicated and comprehensive, including also the localization of operating system , management system ,even corporate culture and business ideas. B. A very important aspect of localization is usually ignored, that is, to bring in and localize the advantageous strengths of giant retailers. To retain their core values and stick to their distinct features are the requirements of localization for transnational retailers. In other words, localization and sticking to their uniqueness or strengths never contradict with each other.Instead, a sound localization occurs under the precondition that the strengths are maintained and enhanced during the process of development and adjustment. 2. 32 Layer 1 : to Localize the Strength of Giant Retailers A. Strength of giant retailers When talking about the localizing of strengths, it is significant to identify the strengths of giant retailers in the first place. Giant retailers have achieved great success in the world market largely because of the competitive advantages developed over decades of operation. Indeed, marketing and distribution expertise adds value at foreign-owned detailing stores.For Chinese consumers in particular, who are increasingly conscious about food safety and hygiene and getting sick with the environment of traditional Chinese markets, transnational retailers offer greater reassurance and a wider choice than traditional markets. ‘Compared with a Chinese supermarket, the service is better, the choice is wider, the food is fresher and they provide shuttle buses,' said Yang Shaping, a retired woman who spends about 100 Yuan during her weekly shopping trip to Wall-Mart. (The Guardian, 25/3/2006) The strengths of giant retai lers are listed as follows: a.Abundant capital, their scale, a stable flow of finance and rapid turnover b. Advanced technology and advanced distribution, logistics systems c. Advanced marketing and management experience 3 d. Well-established global competitiveness, corporate image and culture B. Three phases of localize the strength While it is important to note that transnational giant retailer have their strengths , more attention should be paid to the localization of these strength due to the fact that no business idea or system can achieve success by simply copying unless they are made suitable to the local market environment.Wall-Mart's Cam's Club is a good case in point: The most important feature of Cam's Club is that it is located in the countryside. It has achieved great success in the United States, however, it turns out to be a total failure in the Chinese market because only a small proportion of Chinese people own private cars. What's worse, the transportation system i n China is far from well-developed. Consequently, city dwellers have difficult access to Cam's Club located far away from their home. Realizing this problem, Wall-Mart soon decides to open stores in the cities to accommodate itself to the Chinese market.To localize the strength, the first step is to bring in advanced technology and management system to a foreign market for that is exactly winner ten AAA value Lies In. I en Toweling step Is to accost tense strengths to certain economic and cultural environments. Next, after localization reaches certain degree, hopefully, this strength can be further developed. 2. 33 Layer 2: to Localize Product and Operational System According to Farley dictionary, retailing is the functions and activities involved in the sale of goods and services to consumers for their personal, family, or household use.It is obvious that retailing as an industry has intense communication with consumers, the service retailers offer is, by large extent, to provide c ustomers with products they need. Due to different culture, custom, demographics, different group of people in different region have varied tastes over products. Therefore, retailers have to make careful investigation and analysis into consumer behavior and preference in order to enhance consumer satisfactory. A thorough localization strategy in product structure is critical to transnational retailers.As for sourcing, localizing the sourcing in local economy enable transnational retailers to meet needs of local customers and reduce delivery cost. Top retailers have come up with a series of advanced business modes and operation system during long time of operating experience. But this modes and system should be integrated into and modified with local environment and uniqueness, as explained above in the elaboration of the first layer of localization. 4 3. Retailing Transnational in China 3. The Status Quo of Chinese Retail Environment Like everything else in China these days, the cha nge of retail market is at a spectacular speed and on a scale the world has never seen before. It is already one of the fastest expansions in retail history, but analysts say it could get faster as international giants race for territory in a $billion retail market that is growing at a double-digit pace. The domestic supermarket leader is Baling, with nearly 2 000 stores, and the foreign legion is led by Careful, which has 70 hypermarkets, eight supermarkets and more than 100 discount shops.Wall-Mart currently has 56 megastars mostly in the southeast with about 30 000 employees. But even after it opens 20 more stores this year, its sales are unlikely to enter the top 10 of China's major retailers. Germany's Metro is the No. 4 foreign player, with 24 stores and another 40 within five years. Foreign investment has formerly been focused in Shanghai, Beijing, Sheen and other large eastern cities. But, as a sign of the growing power of Chinese consumption, many of the new shops are being opened in smaller cities. 3. Opportunity and Threat Analysis 3. 21 Opportunities for Retailing Transnational There is no shortage of incentives for foreign retailers in China. For many Chinese people, price is no longer the priority. Foreign retailers are also Telling It sealers to set up snoops Decease many restrictions n overseas firms were lifted in 2004 under China's World Trade Organization commitments. A. The largest consumer market With a population of 1. 3 billion and massive markets, China is attracting intense interest from the world as a consumer market.Over the past 20 years, retail sales in China have Jumped nearly 15% annually, to some $837 billion in 2005 making it the third-largest market on earth. The average annual income of China's 1. 3 billion people is less than $1 500. But the middle class is growing fast particularly in eastern cities and it has enough disposable income to start focusing on brand, safety, quality and taste. Consumer demand for modern shopping environment Since the mid sass, the high demand for modern shopping environments in China has been growing due to the rapid economic growth and rising levels of affluence. And consumer expectations have shot up even faster.Accompanied by the increase of purchasing power in China since then, both traditional supermarkets and department stores were not be able to meet the requirements of one-stop 5 shopping and shopping as leisure. Just a few years ago, most Chinese were content to line up in state-owned stores to buy whatever meager products were available, ND then shuffle off to unsanitary outdoor markets for meat, eggs, and vegetables. Now both local chains and the multinationals are pushing out the stodgy old state retailers and mom-and-pop shops by building big, convenient stores in central locations in Beijing, Shanghai, and Gunshot.Huge mass retailers emerged by providing customers with a great variety of goods at low cost and one-stop shopping. Therefore, it is undoubted a go lden time for retailers to enter a market that shows great assurance to them. For example, Macro from the Netherlands first entered Taiwan and quickly captured more than 30% market share in 1989. B. The change of policy from a protectionist orientation toward liberalizing In keeping with the conditions for China's membership in the World Trade Organization, Beijing on Deck. 1, 2004 lifted most restrictions on foreign retailers. Gone are limits on the number of stores, rules confining them to large cities, and regulations capping the foreigners' stake in local ventures at 65%. C. Regional advantages of Chinese market Cheep and sufficient labor resources: with its vast population, China is always able to provide transnational retailers with abundant labor force which requires relatively low ages. Moreover, Chinese employees are far more reliable than their counterpart in the host countries of international giant retailers.Cheap merchandises: the cost of many products in China is much less than in developed countries because of the cheap labor, which allows transnational retailers to make reasonable sourcing decisions both in China and the world. 3. 22 Threats for Retailing Transnational Given all the opportunities presented by China's growth, many NC retailers are eager to gain access to this market. The country unique traditions, history, culture, and overspent policies, altogether mean that doing business in China can be a complicated and time-consuming undertaking.Foreign retailers interested in gaining access to China face lots of challenges which they must attempt to solve or they will turn away. A. Intense competition from both transnational and domestic companies Competition from transnational companies There has always being fierce competition Detente gallant retailers In ten essences market; no one wants to De lagged Denver. As Tiff Gill, senior manager of the Kurt Salmon Associates Consultancy said, ‘All the big players are engaged in a turf war. It is about being first and getting as much coverage in as many cities as possible.This is a period of very aggressive growth. We are bordering the top end of the curve. But there is a possibility that investment could grow even faster. ‘(The Guardian, March 25, 2006) Many U. S. And foreign retailers are accelerating their investments in China, spurred by further easing of government restrictions and the allure of the world's fastest-growing consumer market. These giant retailers are engaging in fierce competition, opening many new stores in order to take advantage of the high rates of growth in this segment of the detail market 6 B is also pushing hard.The British firm's owner, Kingfisher, plans to increase the number of its stores in China from 49 to 100 by 2010. Kea has also caught the expansion bug. For several years, it has had only two superstores in China, but it plans to open two a year from now on. Competition from Chinese domestic companies Chinese sellers have the edge over foreign rivals, strengthening their presence more rapidly at lower expenditures. Their understanding of the local market and well-developed sales networks enable domestic retailers to respond more quickly and react more flexibly to market changes.With the foreigners attacking their home turf, Chinese retailers are fighting back. Take China Resources Enterprise Ltd. , which operates more than 1,700 supermarkets and hypermarkets, including China Resources Vanguard stores for example, the retailer has trimmed its staff to boost profitability, and has sought to improve management by raiding the foreign chains. Today nearly half of the middle and senior managers in Acre's retail unit used to work at foreign-owned stores. Those foreign-trained managers have brought in marketing expertise.For instance, to build brand loyalty, CREE rewards frequent shoppers with discounts, and the company has lolled out more than 60 private-label products, including bottled water, shampoo, and bod y lotion. And CREE is moving upscale. The company this year expects to open four â€Å"lifestyle† stores offering higher-end products. Plans call for an additional 20 such stores within three years. Chinese government's ultimate goal is to create a dozen or so big local players that will be strong enough to compete with the multinationals at home and expand overseas.It is not possible for the Chinese government to allow foreign retailers to take the dominant position in the Chinese market. B. Diversified consumer behavior Chinese people have their own unique characteristics, considerably different from, sometimes contrary to, that of Westerners. Consequently, Chinese consumers have their unique buying behavior, buying motive, their preference on merchandise and taste on design etc. Therefore, the marketing strategy to penetrate Chinese market should be tailored to these Chinese characteristics. Unique Chinese characteristics * Chinese adapted to catering to authority and to h armonize with others. Chinese have more interest In unman Telling Ana mementos than clientele or logical concerns. In terms AT KICK read, literary books rate more highly than scientific books, compared with westerners. 2003:128-161) Chinese culture is built on trust, relationships, and mutual respect. * Negotiations are normally bottom-up and informal. (Comfort, J. 2001 : 23-26) *The concept of face' is very important Avoiding action that could be perceived as anti-china, coercive, or condescending. Chinese purchasing behavior and recent trends * The Chinese display a strong suspicion of cheap products combined with a desire for bargains.The typical Chinese shopper engages in habitual comparison shopping rather than 7 impulse buying, typified by the saying, ‘Never make a purchase until you have compared three shops. ‘ Nevertheless, shoppers quickly snap up items perceived to be bargains. * Generally speaking, Chinese are fickle customers with little brand loyalty. (Kate- if, lee 2003: 10-13) When selecting purchases, the Chinese tend to attach more importance to the reputation of the item among the community they belong to, such as colleagues, friends, neighbors than to the performance of the goods or how well they suit their lifestyle.Thus, penetration of all communities is important for successful marketing in China. * Laying great emphasis on freshness f food: * There are also numerous new trends for Chinese consumer, which makes it difficult for overseas retailers to sensor and follow. A. Being increasingly conscious about food health and hygiene b. Issues of obesity and nutrition amongst children are also of increasing concern. Double-digit growth in the fast food and snack industries, changing lifestyles and a uniquely Chinese legacy – the one child policy -? are key drivers. C.Concerns focused on environment, safety have accelerated in the wake of CARS, avian flu and widespread pollution, prompting a wider consciousness about product s afety – from ice cream to I-pods. And, while perhaps sporadic and not yet conscious, a linkage between consumer rights and wider environmental concerns is beginning to emerge. D. While still evolving, the expression of consumer rights in China marks an important stage on the road to a greater collective social conscience, which, for so long, has opted to be quietly oppressed by those in authority. 4. Localizing the Strength Giant retailers have all establish a prestige during long time of operation. Yet, in China they may encounter unexpected situation result from the uniqueness of Chinese market. Consequently, retailers should be clear about what detergents can remain effective and what should be changed and localized. While Careful draws on its network system in its global operations (e. G. For certain IT and logistical systems), most aspects of its activities are strategically localized to meet the specific characteristics and needs of the Chinese market and its business, political and consumer cultures.Generally speaking, the key success factors for Careful, which are applied worldwide, are: one-stop shopping, extremely low prices, full range of choices, self-service, and free parking. These factors can be viewed as the strength of Careful. To remain competitive in China, Careful bought in these strengths with her, adopting flexible two-stage philosophy to localize her long-established strength and achieve stable growth. At the 1st stage, to enable branch stores to smoothly operate as fast as possible and to maintain high turnover.Meanwhile, to decentralized authority of set-up branches to link with community development that Totally leads ten Increases AT local tax, employment Ana Turner proselytes AT communities, Careful decides to set up a new store after the investigations of location, store space and neighboring purchasing power. For example, she built a whole-selling or green store in industrial region and a general retailing or blue store in residential ones in Taiwan. By adopting this strategy, Careful could capture both big and 8 small accounts in one shot and then grow much faster than her rivals in the early stage of market entry.At the 2nd stage, Careful focuses on customers, personnel training and market channels. She gradually enhances service quality, product innovation and emphasizes personnel cultivation. Frenchmen take the positions of top-level management constantly to infuse management philosophy of ‘serve customers' and ‘action orientation' into each store overseas. When walk into any stores of Careful, you will see many staff walk around to replenish stocks all the time. The manager in charge of a store also wanders around the store once it is open.Careful further adopts strategic alliances to develop private label products to supply more offerings so as to meet the needs of one-stop shopping of Chinese people. At the same time, utilizing the system of commerce automation to centralize the pur chasing matters of all stores, Careful could coordinate orderings, stock management and data processing for better control and decision-making. . 33 Public Relation In China, the localization of relation is the core of strategic localization. Chinese people pay special attention to the harmony of community.To deal with ‘relation' in China is a matter of delicacy to transnational retailers because, for one thing, the relation-business pattern is very much different from their operation in western countries; for another, it is essential to their success in the Chinese market. The most successful retailing companies have been willing to exchange short-term profits for long-term success, short-term employee productivity for long-term employee development, and short-term expedience for long-term government trust. Relation with government As a special Chinese characteristic, good government relationship is very important for companies.The government is not only a major consumer (gov ernment procurement) , but it is also the main policy maker and opinion leader. Learning how government works and how to establish good relationships is a critical step. A foreign company that is considered a friend o government will be granted favors such as a heads-up on legislation changes or inside advice on how to do business. Conversely, a company that is deemed unfriendly will suffer consequences such as negative comments about its products or passage of laws that exclude it from doing certain business.Getting on the wrong side of a key government agency can be disastrous. Interestingly, Carouser's relationship with the Chinese government is a love-hate one. She has made full use of the loopholes in government regulation to dominate the Chinese market, while at the same promoting employment and improving living standard. Relation with Partners Careful is good at choosing and maintaining local partners. She is always n seek of experienced local retailers actively and establish ing cooperation with them to get Tambala to ten local market as soon as poss. Ole Ana gain support In sourcing, human resources. 9 5.Conclusion Further Implications for transnational retailers operating overseas Improving crisis management capacity When operating in foreign country, retailers are always confronted with problems. What transnational retailers need to do is to improve crisis management capacity. Take Wall-Mart's bean curd crisis for example, instead of responding to the problem actively, it remained science long before giving a suitable explanation, which had ruined its image in Gudgeon seriously. When facing crisis, it is important to make quick response because silence may be interpreted as being indifferent and irresponsible by local consumers.Then, active investigations should be carried out immediately to find the causes. Finally, the existing problems need to be solved as soon as possible. Shaping humane culture That most retailers prefer on- going promotions to attract new customers and retain old ones is totally different from everyday low price and no price promotion practices of Wall-Mart. An open and tolerating culture of Wall-Mart could endure over time because managements treat employees as their associates. They show respect to each other and share both profit and knowledge that lead to the creation of a harmony organizational climate.Therefore, companies ought to develop themselves not as a workplace but a learning institution with the culture of caring and sharing. Combining sales channels Retailers could combine sales channels of physical stores and virtual ones to widen their accessibility to potential customers. The virtual shops could not only increase attention sales, but also accumulate market information for further investigation. Regarding localization as a two-way process Localization needs to be read as a potentially two-way process that is not simply about the transnational retailers adapting themselves to specific mark et conditions.Certain retail formats and technologies developed in particular contexts may then be diffused to other country operations, including the home market. Samsung-Tests, for example, has developed an IT system that has subsequently been rolled-out across the company, and is currently home to a ‘global' team working on e-commerce technology. The emergence of China will be the single most important economic event in the next decade. Along with it will come tremendous business opportunities, a large pool of talent, and many powerful companies.The stakes are high for retailing company. If it fails, another company or product could become a Chinese national standard, its products could be excluded from government procurement, and its image could be destroyed. If it succeeds, it stands to gain sustainable and predictable profitability, win-win partnerships with the Chinese government and companies, and great employees from a pool of amazing talent. This paper describes a hi gh-level plan of how to achieve this success by localization in China, by learning from other companies' success and failures.First, a company must localize 10 Localization strategy AT Remonstration Retailers In c in 3 layers. Then, these strategies should be adapted to unique Chinese characteristics. In addition, giant retailers needs to improve crisis management capacity, shape humane culture, and develop greater information system. By carrying out the proposed strategy of localization, retailing companies can realize their potential in China by assisting China to realize her potential in the 21st century. 11

Tata Corus

CONSOLIDATED FINANCIAL STATEMENT PROJECT TATA- CORUS ACQUISITION SUBMITTED TO: Dean Dr. Badrinath Prof. K. Govindarajan SUBMITTED BY BADRI NARAYANAN – 112071013 TABLE OF CONTENTS SR NO 1. PARTICULARS PART 1 †¢ Global steel industry †¢ About TATA Steel †¢ About Corus PART 2 †¢ Legal form †¢ Mergers and Acquisition †¢ Method †¢ Terms of transaction †¢ Valuation Matters 2. 3. PART -3 †¢ Reasons for the merger †¢ Objectives for a merger †¢ Culture differences †¢ Post – Acquisition 4. PART 4 †¢ Outcome of the merger – success or failure †¢ Financial indicators †¢ Milestones of the TATA Corus deal 5.CONCLUSION 6. BIBLIOGRAPHY PART – 1 GLOBAL STEEL INDUSTRY Steel was an alloy of iron and carbon containing less than 2 per cent carbon and 1per cent manganese and small amounts of silicon, phosphorus, sulphur and oxygen. Steel was the most important engineering and construction material in the world. It was used in every aspect of our lives, from automotive manufacture to construction products, from steel toecaps for protective footwear to refrigerators and washing machines and from cargo ships to the finest scalpel for hospital surgery. Most steel was made via one of two basic routes: 1.Integrated (blast furnace and basic oxygen furnace). 2. Electric arc furnace (EAF). The integrated route used raw materials (that is, iron ore, limestone and coke) and scrap to create steel. The EAF method used scrap as its principal input. The EAF method was much easier and faster since it only required scrap steel. Recycled steel was introduced into a furnace and re-melted along with some other additions to produce the end product. Steel could be produced by other methods such as open hearth. However, the amount of steel produced by these methods decreased every year.Of the steel produced in 2005, 65. 4per cent was produced via the integrated route, 31. 7percent via EAF and 2. 9 percen t via the open hearth and other methods. At a steel mill, the crude steel production process turned molten steel into ingots, blooms, billets or slabs. These were called semi-finished products. Semi-finished products were solid blocks of steel, usually with a square or rectangular cross section. A flat steel product was typically made by rolling steel through sets of rollers to produce the final thickness. There were two types of flat steel products- Plate products and Strip products.Supply of raw materials was a key issue for the world steel industry. IISI managed projects which looked at the availability of raw materials such as iron ore, coking coal, freight and scrap. Scrap iron was mainly used in electric arc furnace steelmaking. Apart from scrap arising in the making and using of steel, obsolete scrap from demolished structures and end-of life vehicles and machinery was recycled to make new steel. About 500 million tons of scrap was melted each year. Iron ore and coking coal w ere used mainly in the blast furnace process of iron making. For this process, coking coal was turned into coke, an lmost pure form of carbon which was used as the main fuel and reductant in a blast furnace. Typically, it took 1. 5 tons of iron ore and about 450kg of coke to produce a ton of pig iron, the raw iron that came out of a blast furnace. Some of the coke could be replaced by injecting pulverized coal into the blast furnace. Iron was a common mineral on the earth‘s surface. Most iron ore was extracted in opencast mines in Australia and Brazil, carried to dedicated ports by rail, and then shipped to steel plants in Asia and Europe. Iron ore and coking coal were primarily shipped in capsize essels, huge bulk carriers that could hold a cargo of 140,000 ton or more. Since the World War II, the steel industry had experienced three distinct phases- growth (195073), stagnation (1974-2001) and boom (2002-2006)3. The demand for steel grew at an annual rate of 5. 8per cent duri ng 1950-73 as the industrializing nations were building their civil infrastructure. The oil shocks of 1973 through 1979 slowed consumption in the second phase. The production of crude steel grew at 0. 6per cent p. a. over the entire period. Steel prices declined by 2-3 per cent p. a.During 1999-2001 the industry‘s overcapacity hovered near 25per cent globally. Only a few companies were able to sustain. Since 2002 the annual steel production had grown at 7-8per cent driven almost entirely by the double digit growth in China. The huge demand from China had caused a commensurate leap in steel prices. The industry had experienced a drop in the over capacity from 23per cent in 2001 to about 17per cent from 2003-2005. But the demand from China had also witnessed a structural change. From 2002-2004 China‘s capacity for producing crude steel increased on average by 55per cent. By 2005 China became a net exporter of steel.In the first half of 2006 China overtook Japan, Russia and the EU 25 to become the world‘s largest steel exporting country. In June 2006 that winning companies in the steel industry would have somewhere between 150m-200m tons of annual capacity by 2015 and that scale was crucial in the pursuit of value. Shanghai Baosteel, which, although founded in 1998, had already become the world‘s fifth largest steel maker producing 22. 7 m tons in 2005. The potential acquisition of Corus by Tata Steel would create a new entity with a production volume close to Baosteel‘s. CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRYThe countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i. e. 419m ton, Japan accounts for 9% i. e. 118m ton, India accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth. The steel industry has been witnessing robust growth in both domestic as well as international markets. In this article, let us have a look at how has the steel industry performed globally in 2007.ABOUT TATA & CORUS â€Å"Tata Steel has always believed that the principle of mutual benefit – between countries, corporations, customers, employees and communities – is the most effective route to profitable and sustainable growth. † Tata Steel Limited is a multinational steel company headquartered in Mumbai. It was established by Jamsetji Tata in year 1907 and changed its name TISCO to Tata Steel in 2005. It is the tenth-largest steel producing company in the world and the largest private-sector steel company in India measured by domestic production with an annual crude steel capacity of over 28 million tonnes per annum.It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial pre sence in over 50 countries. They were world's 56th largest and India's 2nd largest steel company with an annual crude steel capacity of 3. 8 million tonnes. Based in Jamshedpur, India, it was part of the Tata group of companies. Tata Steel’s larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia.Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel). Tata Steel’s vision is to be the world’s steel industry benchmark through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency. Corus Group is a multinational steel-making company headquartered in London.It is the world's seventh largest and seco nd-largest steel-maker in Europe and now a subsidiary of Tata Steel. Corus Group was formed through the merger of Koninklijke Hoogovens and British Steel in 1999 forming the third largest producer of steel behind POSCO of South Korea and Nippon Steel of Japan and was a constituent of the FTSE 100 Index until it was acquired by Tata in 2007. In 2010 Corus announced it was changing its name to Tata Steel Europe and adopting the Tata corporate identity. British Steel Corporation was a large British steel producer, consisting of the assets of former private companies which had been nationalized.In 1988 the company was privatized as a result of the British Steel. Koninklijke Hoogovens was a Dutch steel producer founded in 1918, located in Ijmuiden. The Corus was having leading market position in construction and packaging in Europe with leading R&D. The Corus was the 9th largest steel producer in the world. PART 2 LEGAL FORM Generally, there are many forms of combination of two companies , such as acquisition, merger, takeover and hostile takeover etc.. They are different terminologies used under different situations.Though there is a thin line difference between them but the impact of each kind are completely different. Merger: A merger is when two companies which are about the same size or strength come together to form a single company. They combine their respective resources for mutual gains or to reduce competition. In such a case, the deal gets finalized on a friendly terms and both the companies share equal profits in the newly created entity. Acquisition: When one company acquires the other and rules all its business operations, it is known as acquisitions. In this process of restructuring, one company overpowers the other company.Among the two companies, the one that is financially stronger and bigger in all ways establishes it power. Then we can know that acquisition is usually happen when the company is different in size, and both the acquiring company an d subsidiary want the combination in the meantime, in another word, the subsidiary company is not resisted to the combination. It is frequently used to describe more friendly acquisition, or used in conjunction with the word merger, where the both companies are willing to join together. Takeover: Takeover also occurs when one company purchases another, it is the similar with acquisition, but takeover enerally happens when a company buys another company which is not doing well or has gone bankrupt, and when the transaction is done in an unfriendly manner in more or less a forceful way in which the company being acquired is resisting. The acquiring company usually initials the combination. Accounting Method: Pooling of interests: This is generally accomplished by a common stock swap at a specified ratio. For example: When M&I Bank merged with National City Bank Corporation, the common stock of the two companies were swapped at a ratio between . 55 and . 5363 shares of M&I for every sh are of National City. Such mergers are only allowed if they meet certain legal requirements. Purchase acquisition: This involves one company (the acquirer) purchasing the common stock or assets of the target company. The acquiring company offers to purchase the target company‘s stock at a given price in cash, securities or both. This offer is called a tender offer because the acquiring company offers to pay a certain price if the target‘s shareholders will surrender or tender their shares of stock.Generally, this offer is higher than the stock‘s current price to encourage the shareholders to tender their stocks. The difference between the share price and the tender offer is called the acquisition premium. Consolidation: The existing companies are dissolved and a new company is formed to combine the assets of the existing companies. Both companies’ stocks are surrendered and new stock is issued in its place. E. g. both Daimler-Benz and Chrysler ceased to exis t when the two firms merged and a new firm DaimlerChrysler was created. Some other related terms are horizontal, vertical and conglomerate mergers.Horizontal mergers happen when a company merges with another company which is a direct competitor in the same product lines and markets. A vertical merger occurs when the company merges with the suppliers or customers. Conglomerate mergers occur when the companies combined have no relationship to one another. It’s a friendly takeover and 100% acquisition was done by TATA steel. For the consolidation, TATA used acquisition method. TERMS: Following are some key terms of the transaction: 1. Tata Steel purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal cumulatively valued at $12. 4 billion. The deal was the largest Indian takeover of a foreign company and made Tata Steel the world’s fifth-largest steel group. And a wholly owned subsidiary, called Tata Steel UK would be set up by Tata Steel. 2. T ATA financed its acquisition not only through its own equity contribution but a package of market securities: a) Equity Capital from Tata Steel Ltd USD4. 10 billion. b) The non-recourse debt from a consortium of banks USD6. 14 billion from. c) Quasi–Equity funding at Tata Steel Asia Singapore USD1. 25 billion. d) Long term Capital funding at Tata Steel Asia Singapore USD1. 1 billion. 3. A new board for the new entity after acquisition: This consists Ratan N. Tata, chairman of Tata Steel, Jim Leng of the Corus group, Muthuraman, Managing Director of Tata Steel, Ishaat Hussain and Arun Gandhi, directors of Tata Sons was formulated to develop and execute the integration and further growth plans. It is the group of top managers from both companies; it can help the new entity fit in much quickly with different culture. Investors in a company that is aiming to take over another one must determine whether the purchase will be beneficial to them.In order to do so, they must ask thems elves how much the company being acquired is really worth. Naturally, both sides of an M&A deal will have different ideas about the worth of a target company: its seller will tend to value the company at as high of a price as possible, while the buyer will try to get the lowest price that he can. There are, however, many legitimate ways to value companies. The most common method is to look at comparable companies in an industry, but deal makers employ a variety of other methods and tools when assessing a target company. Here are just a few of them: 1.Comparative Ratios – The following are two examples of the many comparative metrics on which acquiring companies may base their offers: Price-Earnings Ratio (P/E Ratio) – With the use of this ratio, an acquiring company makes an offer that is a multiple of the earnings of the target company. Looking at the P/E for all the stocks within the same industry group will give the acquiring company good guidance for what the targe t's P/E multiple should be. ? Enterprise-Value-to-Sales Ratio (EV/Sales) – With this ratio, the acquiring company makes an offer as a multiple of the revenues, again, while being aware of the price-to-sales ratio of other ompanies in the industry. ? 2. Replacement Cost In a few cases, acquisitions are based on the cost of replacing the target company. For simplicity's sake, suppose the value of a company is simply the sum of all its equipment and staffing costs. The acquiring company can literally order the target to sell at that price, or it will create a competitor for the same cost. Naturally, it takes a long time to assemble good management, acquire property and get the right equipment.This method of establishing a price certainly wouldn't make much sense in a service industry where the key assets – people and ideas – are hard to value and develop. 3. Discounted Cash Flow (DCF) A key valuation tool in M, discounted cash flow analysis determines a company's c urrent value according to its estimated future cash flows. Forecasted free cash flows (operating profit + depreciation + amortization of goodwill – capital expenditures – cash taxes – change in working capital) are discounted to a present value using the company's weighted average costs of capital (WACC).Admittedly, DCF is tricky to get right, but few tools can rival this valuation method. Synergy: The Premium for Potential Success For the most part, acquiring companies nearly always pay a substantial premium on the stock market value of the companies they buy. The justification for doing so nearly always boils down to the notion of synergy; a merger benefits shareholders when a company's post-merger share price increases by the value of potential synergy. Let's face it, it would be highly unlikely for rational owners to sell if they would benefit more by not selling.That means buyers will need to pay a premium if they hope to acquire the company, regardless of what pre-merger valuation tells them. For sellers, that premium represents their company's future prospects. For buyers, the premium represents part of the post-merger synergy they expect can be achieved. The equation solves for the minimum required synergy: In other words, the success of a merger is measured by whether the value of the buyer is enhanced by the action. However, the practical constraints of mergers, which discussed often, prevent the expected benefits from being fully achieved.Alas, the synergy promised by deal makers might just fall short. PART 3 REASONS FOR MERGER Synergies from the TATA-CORUS Deal I. Tata Steel would get an access to the European market. Corus has already a welldefined network in European Market. If Tata Steel had independently entered the European market, it would have taken a considerable time to develop a wellestablished network. In the post deal scenario it will become a global player with the balanced presence in developed European market and fast growing Asian Market. II.Tata Steel will have a strong position in construction, automotive and packaging market sector. III. It will have a low cost position in Europe and South East Asia. IV. It can double the size and profitability V. The deal has expanded scale from 7 MTPA to 25 MTPA and reaps significant economies of scale. VI. The merged entity would become world’s 6th largest steel company with 25. 6 MTPA of crude steel production. VII. The combined entity will have more efficient operations through enhanced optionality to optimize asset base and material flow, including sourcing of raw materials, and semi-finished steel.VIII. Better equipped to race intensifying competition arising from consolidation in the industry globally. IX. Both Tata Steel and Corus are a strong cultural fit. X. Tata Steel would benefit from Corus’s pan-European distribution network. XI. The acquisition gets with Tata Steel’s stated objective of having a global distribution n etwork. XII. There a strong cultural fit both the two companies. Both Tata Steel and Corus have strong commercial relationship. OBJECTIVES OF THE MERGER Tata’s objectives for buying Corus 1. Tata is looking to manufacture finished products in mature markets of Europe. . At present manufactures low value long and flat steel products while Corus produces high value stripped products 3. A diversified product mix will reduce risks while higher end products will add to bottom line. 4. Corus holds a number of patents and R & D facility. 5. Cost of acquisition is lower than setting up a green field plant and marketing and distribution channels 6. Tata is known for efficient handling of labour and it aims at reducing employee cost and improving productivity at Corus 7. It had already expanded its capacities in India. . It will move from 55th in world to 5th in production of steel globally. 9. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to som e of the largest steel buyers open new markets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. 10. A presence in mature markets would also provide Tata Steel an opportunity to go further up the value chain as demand for specialized and high value-added products in these markets is high. 11.Corus is also very strong in research and technology development, which would add to the competitive strength for Tata Steel in future. 12. As stated by Tata, the initial motive behind the completion of the deal was not Corus’ revenue size, but rather its market value. Even though Corus is larger in size compared to Tata, the company was valued less than Tata (at approximately $6 billion) at the time when the deal negotiations started. Corus’ objectives for selling 1. Corus needs supply of raw material at lower cost 2. Total debt of Corus is 1. 6bn GBP 3.Though Corus has revenues of $18. 06bn, its profit wa s just $626mn (Tata’s revenue was $4. 84 bn & profit $ 824mn) 4. Corus facilities were relatively old with high cost of production 5. Employee cost is 15 %( Tata steel- 9%) 6. From Corus’ point of view, the basic reason for supporting this deal were the expected synergies between the two entities. Corus has supported the Tata acquisition due to different motives. With the Tata acquisition Corus has gained a great and profitable opportunity to make an exit as the company has been looking out for a potential buyer for quite some time.Benefit for the Tata’s stakeholders: Any advantage and profits from this deal will merge only when Tata Steel would be in a position to export low-cost slabs toCorus. †¢ There may be restraints to exports as Tata Steel will need to heed the requirements of its other acquired companies in South East Asia of NatSteel and Millennium Steel. †¢ This effect may change if the Tatas can acquire businesses in the low-cost regions suc h as Latin America, opening up an assured source of slab-making that can be exported to Corus’s plants in the UK. †¢ Iron ore policy in India undergoes a major change in the coming years. If global consolidation becomes possible with the merger of Thyssen Krupp with Nucor or Severstal with Gerdau or any the top five players. The possibility of pricing stability may ease the performance pressures on Tata-Corus and moderate the risks of restructuring at high cost plants in UK. †¢ If Tata considers global listing say in London it may help the group commands a much higher price-earning multiple and give it more flexibility in managing its finances. Objectives – Achieved or not: Going by the stock market reaction initially, the acquisition was a big blunder.The stock tanked 10. 5 per cent after the deal was announced and another 1. 6 per cent. Investors were worried about the financial risks of such a costly deal. But after successfully acquiring Corus, Tata Steel became the fifth largest producer of steel in the world, up from fifty-sixth position. There were many likely synergies between Tata Steel, the lowest-cost producer of steel in the world, and Corus, a large player with a significant presence in value-added steel segment and a strong distribution network in Europe.Among the benefits to Tata Steel was the fact that it would be able to supply semi-finished steel to Corus for finishing at its plants, which were located closer to the high-value markets. Managing the obstacles: Coping with a merger can create many problems, some of which are, i. Can make top managers spread their time too thinly and neglect their core business, spelling doom. ii. Potential difficulties seem trivial to managers caught up in the thrill of the big deal. iii. The chances for success are further hampered if the corporate cultures of the companies are very different. iv.The companies often focus too intently on cutting costs following mergers, while revenues, and ultimately, profits, suffer. Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business, thereby prompting nervous customers to flee. In view of the Tata- Corus acquisition, the main obstacles were, 1. The acquisition was not cheap for Tata. The price that they paid represents a very high 49% premium over the closing mid market share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share price over the twelve month period.Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. 2. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two – thirds of the deal has had to be financed through loans from major banks. 3. The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7 percen t on the Bombay stock market. 4.Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% annual interest cost). 5. Corus had existing interest debt charges of $400 million on an annual basis which implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. 6. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to some of the largest steel buyers. The acquisition would open new arkets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. CULTURAL DIFFERENCES There has been a great deal of suspicion on how well the two entities, Tata Steel and Corus would integrate post acquisition. This concern has been expressed since the culture and perspectives of the two companies and the people are s eemingly very different from each other. Ratan Tata however, has been confident that the post-acquisition management will not be too difficult as the two organizational cultures will be effectively integrated.Ratan Tata has said he is confident the two companies will have â€Å"a cultural fit and similar work practices. † Tata Corus has made developed some management structure to deal with the smooth operation of the two entities. It has also adopted several system integrations in both the entities to smoothen the transactions between the two entities. Tata Steel has formed a seven- member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group.Members of the integration committee from Tata Steel include Managing Director B Muthuraman, Deputy Managing Director (steel) T Mukherjee, and chief financial officer Kaushik Chatte rjee. The Corus group is represented in the committee by CEO Phillipe Varin, executive director(finance) David Lloyd, and division director (strip products) Rauke Henstra. The company has also created several Taskforce Teams to ensure integration of specific set of activities in the two entities for smoother transaction. For instance, the company has created a task force to integrate the UK/EU model in construction to the Indian market.To achieve, a taskforce comprising of following executives from both the entities was formed. Members from Corus Mr. Matthew Poole (Director Strategy Long Products Corus) Mr. Colin Ostler (GM Corus Construction Centre) Mr. Darayus Shroff (Corus International) Members from Tata Steel: Mr. Sangeeta Prasad (CSM South, Flat Products) Mr. Pritish Kumar Sen (Market Research Group) Mr. Rajeev Sahay (Head Planning & Scheduling, TGS) The scope of the taskforce will be to: 1. Ensure smooth market knowledge exchange between Tata Corus and Tata Bluescope and iden tify Knowledge gaps. . Complete mapping of construction sector for Indian market using external resource if necessary. 3. Understand key drivers for construction through knowledge gained from stakeholders of the construction community. 4. Map key competencies of Tata Corus against market drivers/ requirements. 5. Develop a five- year strategy. The reasons why cultural integration is a huge challenge are: 1. Corporate culture is an amalgamation of: National culture, Religious culture, and professional culture. These cultural dimensions are often invisible – but ever present & relevant. 2.Need to balance the local needs and the global needs during the post-acquisition period. These needs may be the local community demands, business demands, investor’s demands etc. 3. Need to meet the high expectations of the shareholders post-acquisition. Often times these acquisitions are financed through LBO or debt, and this needs good cash flows to sustain. In addition, the managemen t will be under pressure to show the benefits of acquisition as promised before the acquisition 4. Lack of Experience in dealing with a different culture. This applies equally to Indian & foreign company managers.Most managers lack the cross-cultural skills needed during the post-acquisition integration. POST ACQUISITION TATA †¢ Tata Steel has formed a seven-member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group. The acquisition by Tata amounted to a total of 608 pence per ordinary share or ? 6. 2 billion (US $12 billion) which was paid in cash. First of all, the general assumption is that the acquisition was not cheap for Tata.The price that they paid represents a very high 49% premium over the closing midmarket share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share p rice over the twelve month period. Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two-thirds of the deal has had to be financed through loans from major banks.The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7% on the Bombay stock market. Despite its four times smaller size and smaller capacity, Tata Steel’s operating profit for 2006, earning $840 million on sales of 5. 3 million tonnes, were very close in amount to those generated by Corus ($860 million in profits on sales of 18. 6 million tons). Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% †¢ †¢ †¢ †¢ †¢ †¢ annual interest cost). This amount combined with Corus’ existing interest debt charges of $400 million on an annual basis implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. The debate whether Tata Steel has overpaid for acquiring Corus is most likely to be certain, since just based on the numbers alone it turns out that at the end of the bidding conflict with CSN Tata ended up paying approximately 68% above the average price of Corus’ shares.Another pressing issue resulting for this deal that has created a dilemma between experts and analysts opinions is whether this acquisition for the right move for Tata Steel in the first place. The fact that Tata has managed to acquire a British steel maker that has been a symbol of Britain’s industrial power and at the same time its dominion over India has been perceived as quite ironic. Only time will show whether Tata wil l be able to truly benefit from the many expected synergies for the deal and not make the typical mistakes made in many large M&A deal during this beginning period.PART 4 OUTCOME OF THE MERGER – SUCCESS OR FAILURE Many financial analysts felt that Tata Steel overpaid for the Corus acquisition. Immediately after the acquisition announcement, Tata Steel‘s share price fell by 10. 7 percent to Rs. 463. 95 on the Bombay Stock Exchange. According to Martin Stanley, London based head of spread betting at the brokerage firm of GFT Global Markets, ? The consensus view seems to be that Tata have probably overpaid, but if further consolidation in this sector occurs going forward then this will look like very fair value? International Herald Tribune, 1/30/07). Additional concerns were raised about the debt liability of Tata Steel which borrowed more money to fund the acquisition. According to Standard & Poor‘s analyst Anushkant Taneja, ? The size of the Tata acquisition and t he potential cash outflow in Tata Steel‘s offer for Corus could have an adverse impact on its financial risk profile. Standard & Poor‘s rating service in India, Crisil, placed Tata Steel on the ? negative implications watch list after its Corus acquisition.The contention was that Tata Steel had overstretched itself due to execution risk and lack of experience by Indian companies in acquiring international businesses (Range, 2007, April 26). Moody‘s Investor Services downgraded Tata Steel‘s rating from Baa2 (investment grade) to Ba1 (speculative grade). The primary reason cited was Tata Steel‘s weakened balance sheet liquidity and financial profile resulting from its largely debt-funded acquisition of Corus. Moody‘s Senior V. P. Alan Greene stated Tata Steel‘s current high leverage constrains its financial strength and flexibility and ? he main challenge facing management is to de-risk the large capital structure while not neglecting existing operations and opportunities for rapid growth in Asia.? He further stated that ? Tata Steel‘s ambitious capacity expansion plan will lead to higher project execution risk over several years and materially elevate financial leverage unless it is deferred.? (Businessline, 2007, July 7). According to Sreesankar, head of research at Il&Fs investments in Mumbai, ? They (Tata Steel) wanted the company and they have got it. But we have to see how the finding happens and how the integration progresses.One distinction is that EBITDA (earning before income taxes and depreciation allowance) margins for Tatas are about 40 percent and for Corus is about 7 percent.? Clearly, the financial industry analysts were skeptical about the long-term financial viability of this acquisition. According to Shriram Iyer, head of research at Edelweiss in mumbai, ? †¦the time horizons of investors and of the company may not be aligned MANAGEMENT’S POINT OF VIEW This proposed acquisition repres ents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion.This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment. (Ratan Tata quoted in Financial Express; 2007, February 13) The Tata Steel board of directors approved the project to acquire Corus, as it was consistent with stated objectives of growth and globalization. Although Tata Steel ended up paying more for Corus than its original bid, its management felt that there were many favorable strategic and financial outcomes to be realized. To begin with, this acquisition would position the combined group as the fifth largest steel company in the world by production output.The new entity would have a meaningful market presence in both Europe (where Corus was a well established brand name) and Asia (where Tata was a well established brand name). Combining the low cost upstream production in India FINA NCIAL INDICATORS: KEY MILESTONES OF THE TATA CORUS DEAL September 20, 2006:-Corus Steel has decided to acquire a strategic partnership with a Company that is a low cost producer October 5, 2006:- The Indian steel giant, Tata Steel wants to fulfill its ambition to Expand its business further. October 6, 2006:- The initial offer from Tata Steel is considered to be too low both by Corus and analysts.October 17, 2006:- Tata Steel has kept its offer to 455p per share. October 18, 2006:- Tata still doesn’t react to Corus and its bid price remains the same. October 20, 2006:- Corus accepts terms of ? 4. 3 billion takeover bid from Tata Steel. October 23, 2006:- The Brazilian Steel Group CSN recruits a leading investment bank to offer advice on possible counter- offer to Tata Steel’s bid. October 27, 2006:- Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for its decision to accept an offer from Tata. November 3, 2006:- The Russian steel giant Severstal announc es officially that it will not make a bid for Corus.November 18, 2006:- The battle over Corus intensifies when Brazilian group CSN approached the board of the company with a bid of 475p per share. November 27, 2006:- The board of Corus decides that it is in the best interest of its will shareholders to give more time to CSN to satisfy the pre- conditions and decide whether it issue forward a formal offer December 18, 2006:- Within hours of Tata Steel increasing its original bid for Corus to500 pence per share, Brazil's CSN made its formal counter bid for Corus at 515 pence per share in cash, 3% more than Tata Steel's Offer.January 31, 2007:- Britain's Takeover Panel announces in an e- mailed statement that after an auction Tata Steel had agreed to offer Corus investors 608 pence per share in cash April 2, 2007:- Tata Steel manages to win the acquisition to CSN and has the full voting support form Corus’ shareholders CONCLUSION Steel prices, raw material supplies and interest costs on the $8-billion debt have been raised to fund the deal. Soon they may also have to deal with the sensitive issue of possible job There is no doubt that Tata has pulled off a coup — Corus makes nearly four times more steel than Tata Steel.Together, the combine becomes the fifth largest producer in the world and the second in Europe. But to make the most of the deal, Tata has to manage several variables including cuts in Corus’s manufacturing plants. There are also the usual sets of integration challenges that come with such large buyouts. The deal may be done, but the hard work is just beginning. In the run up to the auction, Tata had maintained a low profile despite CSN’s aggressive stance. They underestimated our firepower,† says Gandhi, who admits that even bankers to the transaction — ABN Amro and Deutsche Bank — were in the dark as to how far Ratan Tata was willing to go. The only blip, though, was the way the stock markets reacte d. Tata Steel has lost a billion dollars in market capitalization since it first announced its intention to buy Corus in October last year. (The BSE Sensex rose 18 per cent during the same period. ) The market perception is that the Tata Group paid too much for this acquisition.Several brokerage houses have pointed out that the deal implies a high enterprise value/ earnings before interest, taxes, depreciation and amortization (EV/EBITDA) multiple of 9 for Corus versus 4. 6 for Tata Steel. (L. N. Mittal paid 5. 8 times EBITDA for Arcelor. ) Ratan Tata disagrees: â€Å"We believe that, looking back in time, the price today will prove to be one that was worthwhile because the price of steel companies is likely to be even higher in the coming year. † But tying up the funding is the immediate priority. The Corus acquisition is being routed through a special purpose vehicle (SPV) called Tata Steel, UK. A similar structure was used for the Tetley buy in 2000. ) So far, the Tatas ha ve indicated that group holding company Tata Sons will pump in $4. 1 billion as equity into the SPV. The balance $8 billion will be raised by junk bonds and senior term loans (part of it has been tied up with banks like ABN Amro, Deutsche Bank and CSFB). These loans will be serviced out of Corus’s profits; Tata Steel need not repay this. This has effectively ring-fenced Tata Steel shareholders. Few will disagree. The Tata Steel managing director is likely to look for more acquisitions as he aims to increase the company’s total capacity to 100 mt by 2015.To reach that destination, a lot will depend on whether the group can make Corus fly. BIBILIOGRAPHY http://www. worldsteel. org/? action=programs=53 http://www. bseindia. com/bseplus/StockReach/AdvanceStockReach. aspx? scripcode=500470 http://www. motilaloswal. com/Research/ http://74. 125. 155. 132/scholar? q=cache:1p4SLlOZDcQJ:scholar. google. com/ +tata+corus+acquisition=en=2000 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1358681 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1431588 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1118306 http://www. nvestopedia. com/university/mergers/mergers1. asp#axzz1zwZQv0dz http://www. mergersandacquisitions. in/index. htm http://www. tatasteel. com/default. asp . http://www. equitymaster. com/detail. asp? date=11/13/2006=1=Tata-Steel-Corus-AWin-Win-Situation http://tejas-iimb. org/articles/04. php? print=true http://arunkottolli. blogspot. ca/2007/11/cultural-integration-post-m. html http://www. scribd. com/doc/22947163/Merger-of-Tata-Steel-and-Corus http://bcgindia. com http://www. worldsteel. org/ http://www. tatasteel. co. in http://www. tatasteel. com http://www. bseindia. com

A Fruit Smoothie Is A Drink Biology Essay

A Fruit Smoothie Is A Drink Biology Essay Fruit and vegetables are not consumed in the required quantities, throughout the world due to a variety of reasons e.g. availability, cost and/or convenience. Even though there importance is clearly defined by the World Health Organisation guidelines (Keenan et al. 2011a), in the developed world convenience is perceived as being the predominant cause for the demise of fruit and vegetable consumption. This has directly led to the development of a new product set – that enables the consumer to achieve the recommended 5 portions a day, whilst maintaining their busy life styles. ‘Smoothies’ have now entered into popular culture; the (Oxford English Dictionary, 2013) defines it as â€Å"Noun – a thick, smooth drink of fresh fruit purà ©ed with milk, yogurt, or ice cream† A fruit Smoothie is a drink that blends fruit and fruit juice together to create a healthy snack. The Smoothie market to have reached $9.0 billion by 2015 (Global Industry Analysts, 201 0) and that UK sales reached 34 million in 2006, which is 6.3 million up on 2001 according to Mintel who also expect Smoothie sales to treble by 2011 (BBC News, 2007). In the USA the sales reached $2 billion in 2012, which has grown 80% over the past 5 years (Smoothie Statistics, 2012). In the UK, the sales of smoothie increase to 80 million in 2007, but showed a reduction in sales gradually falling by 2009, however sales have increased again by 2011 to 55 million (British soft drinks, 2011). Mintel are a company that provide food and drink research to the UK. They have reported that many fruit Smoothies have been found to have a hidden sugar content to sweeten the Smoothie up; many of the fruit Smoothies were found to have hidden sugars comprising of fruit juice concentrates and high fructose syrup (Courier mail, 2013). Most Smoothie’s have apple and banana as core ingredients. Apples have a natural sweetness; this means not as much, if any additional sugar needs to be added to the drink, to sweeten the taste, banana is also added as it adds a natural thickness to the Smoothie, nothing artificial needs to be added to the Smoothie (Innocent drinks, 2013). One problem that is faced is the texture of the drink, it can be quite bitty or grainy, this is derived from tiny particles that some fruits contain, for example strawberries have small pips on the outside of the fruit, so blending the fruit alone will not get the particles to break up. However a way to change this has been found that passing ultrasound waves into the fruit during its preparation makes the particles smaller. Ultrasound wave technology has been available for many years, but in the last 10 years the food industry has developed a methodology to use the ultrasonic waves in food processing (Ultrasonic innovations, 2008). This paper presents an example of using ultrasound waves in the Fruit Smoothie product to reduce the particle size problem outlined earlier. There are a number of advantage s for using ultrasonic waves, they have a more effective mixing and micro-mixing, faster energy and mass transfer, reduction in temperature – the mixture can remain at the same temperature throughout the process. Ultrasound wave technology also increases the production volumes of the Smoothies (Chemat et al., 2011).

Severe Storm class Assignment Example | Topics and Well Written Essays - 1000 words - 1

Severe Storm class - Assignment Example the heavy storm was issued by the NWS; specifically, residents of the Mid-Atlantic were notified that the storm could reduce visibility up to a level of  ¼ miles for a period of one to three hours. Consequently, the National Weather Service also predicted and warned the residents of the region that the heavy storm would lead to heavy flooding that could affect locomotion along major highways (http://www.weather.com, n.p). The heavy rains subjected the Mid-Atlantic region to severe rainfall floods: Some of these regions are also usually vulnerable to coastal flooding, majorly caused by hurricanes or even tropical cyclones. However, recently as a result of the heavy rainfall, they were affected by rainfall flooding, which specifically affected the Virginia and Pennsylvania. Maryland was also affected by the flood and approximately 9,300 people had to go without power supply from 7:18am (http://www.weather.com, n.p). In Pennsylvania, the rainfall flooding caused a mudslide that led to the closure of the Lincoln Borough Road and approximately 30 people had to be evacuated after the flooding damaged their houses. According news that was provided by the NBC News Station, several schools were closed, specifically schools in Warren, Shenandoah as well as in Fredrick Counties due to the heavy storms that led to the high level of flooding in the region (http://www.weather.com, n.p). Within the same state, officials in Charlottesville reported damaged roads, fallen trees and other aspects of damaged environment due to heavy rainfall flooding. Several Roads were also closed in Virginia i.e. Roads along Rivanna River. Other states that were also affected by heavy rainfall flooding were: Illinois, Michigan, New York, Ohio, Texas, and Washington DC among others. The rainfall that caused the heavy flooding within the Mid-Atlantic Region caused serious social problems among the residents of the region. To begin with, a substantial number of residents in the region had to go

Finance Week 3 Essay Example | Topics and Well Written Essays - 250 words

Finance Week 3 - Essay Example Investors that are risk averse will invest a lot of their resources in common stocks due to the fact that common stocks have a higher potential of equity appreciation. Investors that do not apply the diversification principle can lose a lot of money if the particular sector of the market they invest in goes down. It is never a wise idea for investors to place all their eggs in the same basket. Diversification ensures that investors spread their securities around different sectors of the market. Managers can utilize the diversification principle to increase their cash flow position. A way to use investing to increase cash flows is by purchasing blue chip stocks that have a history of paying dividends every year. Another way for managers to improve the cash position of a company is by investing in bonds that pay coupon payments and in preferred stocks that pay yearly dividends. Firms may also improve their cash flow position by selling commercial paper in the marketplace. The most common form of commercial paper is corporate bonds. â€Å"The right diversification strategy can give you the best odds of weathering whatever economic storms may hit the market in the future† (Caplinger, 2012). Caplinger, D. (2012). This Diversification Strategy Will Make Your Portfolio Safer. Retrieved November 9, 2012 from

Takehome midterm Assignment Example | Topics and Well Written Essays - 750 words

Takehome midterm - Assignment Example Bus on the other hand reasons that males get jealous due to physical cheating since he may not be certain about the paternity of the child born out of the relationship. Therefore, the thought of not being the father is laced with jealousy. On the part of women, emotional jealousy springs up if the woman is not sure about protection of resources for the children. According to these thinkers and scholars, the brain is configured with inbuilt with innate or unchangeable parts or forms of computational intuitions. This is to say that human beings are born with some skewed form intelligence which is to imply that human minds are pre-disposed with some form of knowledge. For instance, if a person is born, he or she would intuitively know what plants, people, non-living things, living things are. However, if a physical impact or injury is occasioned to the brain, then it would mean that the brain would be in a position to recall all the things that it had learnt and knew prior to the injury. This is to imply that a brain damage or injury cannot erase all the things and concepts that the brain knew prior to the injury on it. 3) Pinker and Tomasello both address the issue of poverty of stimulus when trying to explain language acquisition. How does it support Pinker’s view, and what does Tomasello have to say about Pinker’s argument? According to Pinker, human brains are innately and unequipped with the ability of them to speak languages even if the people are not necessarily the taught. This is to say once a person is born, he or she would have the instinctive ability to speak a language regardless of the geographic environment in which the person is born into. According to his line of thoughts and arguments, a child once born would have the ability to speak instinctive languages, but since their brains develop, it becomes difficult for their developing brains to grow accordingly since there are not educated on