Growth Strategies Case Study

Natsteel - The Growth Catalyst in Asian Steel Industry

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Abstract:
This case analyses the globalization strategy of TATA Steel, the flagship of INR.480 billion TATA Group and the second largest steelmaker of India. TATA Steel, with an annual capacity of 4.3 mtpa, was ranked 56th by World Steel Institute. The company had a plan to increase its production capacity to 15 mtpa, thereby becoming one of the top 10 steel companies of the world. To fulfill its mission, the company chose to increase the capacity of its existing facilities, set up Greenfield projects and acquired new companies. Due to the emergence of South-East Asian countries as the major steel consumers, it acquired Nat Steel to have an access to these markets. TATA Steel had plans to manufacture primary steel at its plants in Jamshedpur and Orissa, (slated to start production from 2006), places having large deposits of iron ore. This would help the company in transporting the semi-finished products to the Asian markets and also producing and selling the finished goods. Apart from traditional steel manufacturing, the company also forayed into value added steel products (automobile steel and ferro chrome) to strengthen its presence in the global market and became a global company from a local one. The case study offers scope for discussing the trends and present strategies in the global steel industry and how TATA Steel planned to grow according to the recent trends.

Pedagogical Objectives:

• To discuss the trends, patterns of global steel industry and consolidation as a major strategy in fragmented steel industry globally
• To discuss acquisition process of NatSteel by Tata Steel, potential synergies and problems associated with the acquisition
• To discuss how acquisition as a growth strategy help companies to consolidate in fragmented steel industry
• To discuss the key factors which make an acquisition a successful one
• To discuss in details about the problems of acquisition and how the maximum leverage can be gained
• To discuss, the bidding process and funding of an acquisition
• To discuss the value chain of the steel industry and primary steel making process and secondary steel making process.

Keywords : TATA Steel; Nat Steel; South-East Asian steel industry; Merger and acquisition; Growth Strategies Case Study; Crude steel; Backward integration; Locational advantage; Speciality steel; Primary steel making; Secondary steel making; Steel industry value chain; Downstream products; Value added steel; Consolidation; Acquisition

Contents : 
Tata Steel: The Genesis
World Steel Industry In The Era Of Globalisation
Tata Steel’s Globalisation Initiative
Acquisition Of Nat Steel: How It Helped Tata Steel To Globalize
Mittal Steel Co; The Largest Steel Co
World Steel Production In 20th Century (Mtpa)
Top Five Steel Producing Country
Value Chain Of Steel Industry