In what is the largest-ever acquisition by an Indian company, Tata Steel, India’s second largest steel maker, has bid £4.55 ($8.67) a share for a majority stake in Anglo-Dutch steelmaker Corus Group. The Corus board of directors approved the deal and has recommended it to shareholders. Tata, whose bid values Corus at a healthy $10 billion, will pay Corus shareholders entirely in cash. The deal would create the world’s fifth-largest steel company, with a capacity of 23.5 million tons a year and revenues of $24.4 billion. Tata Steel already controls NatSteel and Millennium Steel, in South East Asia, which it acquired in 2004 and 2005 respectively. Despite being the smaller of the two companies, Tata Steel is much more profitable. Corus suffers from high costs of production, which Tata Steel will address by exporting low-cost intermediate products such as slabs from its Indian operations. Alternatively it may consider acquiring a European slab maker to feed Corus’s steel-rolling facilities.
Deals such Tata Steel’s acquisitions are clearly giving Indians a lot to talk about. According to the Association of Unified Telecom Service Providers of India, Indian telecom companies added 4.7 million new GSM subscribers in October—a new record for monthly additions. The additions for CDMA subscribers have not yet been released but are expected to be around 2 million. In September 2006 the GSM operators added 4.4 million subscribers, while CDMA operators added 1.8 million. The combined installed base of cellular users is now 134 million. For the quarter ended September 2006, for the first time India added more cellular subscribers than China, at 17.07 million as compared to 16.8 million added in China.
Growth in India’s index of industrial production (IIP), too, remains very strong. The latest figures released for August 2006 show that the IIP grew by 9.7% compared with the same period a year before. This figure was lower than the 12.6% record reported for the IIP in July 2006 but is still very robust. The cumulative index for April-August 2006 was up 10.6% over the same period in 2005. The rapid rise in the index is being driven by sustained growth in the manufacturing sector.