GCIP acquisition gives sustainability but also substantially increases the risk profile for TCL
Tatas are on the rampage again! This time, it’s the less
talked about Tata Chemicals Ltd. (TCL) that has created the buzz. The company announced a big ticket billion dollar mega acquisition of the US-based natural soda ash maker – General Chemicals Industrial Products (GCIP) on January 31. The acquisition (100% stake through a mix of debt & equity) will not only make TCL the 2nd largest soda ash maker in the world, but also help it command over 14% (over 5.5 million tonnes) of the world’s total soda ash capacity. However, it’s the choice of the target that deserves the real applause! Once the acquisition is complete, over 50% of TCL’s capacity would be through the natural route. This means both sustainability and natural hedge against the commodity cycle. “Since GCIP is using trona natural mineral, which can be converted into soda ash and is more cost effective (as production cost of natural soda ash is 40-45% cheaper than the cost of producing synthetic soda), it means increased profitability for TCL”, avers Rohit Nagraj, Sr. Research Analyst, Angel Broking. A Tata Chemicals spokesperson confirmed to B&E that “by 2009 and 2010, we will have more such overseas acquisitions as we believe Tata Chemicals has not yet utilised its full potential”.
The acquisition will not only enable the company to increase its capacity, but will also, in long term, give access to markets in North America, Latin America as well as Far East. Well, the sustainability is there to stay! (GCIP has natural soda ash mines expected to last for next 100 years). But then there are many who question the move on the backdrop of the US slowdown! “As many chemical manufacturers in the US are facing challenges, so will TCL,” says Paresh Nautiyal, analyst with Arihant Capital.
Moreover, TCL will undoubtedly face integration challenges with the unlisted US firm. Complicating matters further is the size and operating profile of GCIP (Moody). The transaction and the resulting financial & operating profile is still not amply clear. “Exchange rate is another challenge that stands in front of TCL”, Nagraj adds.
Well, the plan looks picturesque perfect. However, the road for TCL as well as the Tata group isn’t an expressway. Tata Group of late has raised lot of debts in financing its elephantine acquisitions and servicing, which might be a problem. There’s a maddening race at Tata Group companies to leverage in-organic growth. Tata Steel acquired Corus for $13.7 billion and another group company Tata Motors is also in talks with Ford to acquire Jaguar & Land Rover for $2 billion apart from many multi–million dollar acquisitions done by TCS, Tata Tea & other group companies in the recent past. And as most of these acquisitions have significantly increased its exposure to the American & European economies, sluggishness in there two markets could place Tata’s plans in jeopardy for quite some time to come.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Tatas are on the rampage again! This time, it’s the less
talked about Tata Chemicals Ltd. (TCL) that has created the buzz. The company announced a big ticket billion dollar mega acquisition of the US-based natural soda ash maker – General Chemicals Industrial Products (GCIP) on January 31. The acquisition (100% stake through a mix of debt & equity) will not only make TCL the 2nd largest soda ash maker in the world, but also help it command over 14% (over 5.5 million tonnes) of the world’s total soda ash capacity. However, it’s the choice of the target that deserves the real applause! Once the acquisition is complete, over 50% of TCL’s capacity would be through the natural route. This means both sustainability and natural hedge against the commodity cycle. “Since GCIP is using trona natural mineral, which can be converted into soda ash and is more cost effective (as production cost of natural soda ash is 40-45% cheaper than the cost of producing synthetic soda), it means increased profitability for TCL”, avers Rohit Nagraj, Sr. Research Analyst, Angel Broking. A Tata Chemicals spokesperson confirmed to B&E that “by 2009 and 2010, we will have more such overseas acquisitions as we believe Tata Chemicals has not yet utilised its full potential”.The acquisition will not only enable the company to increase its capacity, but will also, in long term, give access to markets in North America, Latin America as well as Far East. Well, the sustainability is there to stay! (GCIP has natural soda ash mines expected to last for next 100 years). But then there are many who question the move on the backdrop of the US slowdown! “As many chemical manufacturers in the US are facing challenges, so will TCL,” says Paresh Nautiyal, analyst with Arihant Capital.
Moreover, TCL will undoubtedly face integration challenges with the unlisted US firm. Complicating matters further is the size and operating profile of GCIP (Moody). The transaction and the resulting financial & operating profile is still not amply clear. “Exchange rate is another challenge that stands in front of TCL”, Nagraj adds.
Well, the plan looks picturesque perfect. However, the road for TCL as well as the Tata group isn’t an expressway. Tata Group of late has raised lot of debts in financing its elephantine acquisitions and servicing, which might be a problem. There’s a maddening race at Tata Group companies to leverage in-organic growth. Tata Steel acquired Corus for $13.7 billion and another group company Tata Motors is also in talks with Ford to acquire Jaguar & Land Rover for $2 billion apart from many multi–million dollar acquisitions done by TCS, Tata Tea & other group companies in the recent past. And as most of these acquisitions have significantly increased its exposure to the American & European economies, sluggishness in there two markets could place Tata’s plans in jeopardy for quite some time to come.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
Top Articles on IIPM:-
'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs
workday (watching others slog), the thought of a sunny Jaisalmer trip full of adventure and intriguing cultural revealing was rendering dreamy smirks on my face. The 22-hour long journey was tiresome on occasions when I watched the train halt at as many as 40 almost stranded stations and looked at a travel partner whose agenda seemed no less than setting a world record in sleeping the longest (as well as the loudest). But as soon as I stepped at the Jaisalmer station, energy gushed in. Looking at its low-ceiling construction with wonderfully designed pillars, I handed over myself to the royal city. As I turned around, the Punjabi Jat lad seemed to have done the same too, though in a manner typical to him, stretching out wide (and loud) at the very centre of the railway station, in full public view.
presidency. Instead of transforming the economic situation as expected, Unlike his predecessors, he has let the media write & speculate on his personal life.
important, also has been instrumental in generating maximum complexities to the world affairs. Surprisingly, there has also been reluctance in global initiatives and participation, in resolving its conflicts. Though, Mr. Bush has finally succeeded to sponsor Annapolis peace conference in his last year of presidency and has also succeeded in leaving some positive implications. Instances of sympathy, empathy and donations from many donor countries and organisations in the Paris conference, held just after Annapolis conference, are some examples.
kid to people as old as my father goes into the video-gaming room of my hotel and enjoy big time,” says Abhinesh Sikka, a 26-year old software professional working with US-based Trilogy Software Inc. while explaining how gaming is still not very popular in India. Indeed, a typical talk from a GenNext individual who realises the force behind the global gaming industry, which as per PricewaterhouseCoopers (PwC) is forecasted to grow at a Compounded Annual Growth Rate (CAGR) of 9.1%, escalating to $48.9 billion in 2011 from the current $37.5 billion (estimated for FY2007). So is Sikka right about Indians not loving video-games?
subprime monster’s binge won’t make for a continental cuisine will have to check the order once again. Interestingly, European banks, unlike their US counterparts, seem to have eluded themselves to a large extent from being brutally pulverised by the sub-prime mess and have kept the lid on their balance sheets; but then, times will be getting harder by the day.
TV sets or picture frames in a matter of seconds. We already have the technology to capture user created video, convert it into a 3D object and release it into a virtual world. Residents of Second Life do it everyday. In the years to come, we can add interactivity to these objects in such a way that you could virtually touch and feel them. Online shopping could go 3D with buyers walking through virtual stores and picking up items from shelves. The virtual acts of dropping them into the bag and paying at the counter could translate into shopping carts & online credit card payments. Advanced versions of the technology will allow people to attend social gatherings, educational classes, sports events et al, without leaving the comfort of their homes. Whether such events are actually taking place in the real world or are solely artificial creations of the virtual world will be the discretion of the user. 
can translate a fashion design from the Paris Catwalk to the shelves in 15 days. Innovation is the new god!” Myth-exploding arrives next. “Even if one wants to create a predictable brand message over time, one can’t. Why? Because there are over 50 million blogs, 24x7, flashing out messages about brands. These messages are based on customer experience, personal agenda or social rumour, not strategic positioning! Further brand terrorism is a deadly fact, alive and kicking with China being a soft target. The Formalhyde stores battered their Beer brands. The Triclosan gossip savaged their soap and toothpaste sales. Rui Chenggangs’ nationalist blog shut down Starbucks in the Forbidden City.” Finally, in conclusion, he offers that in today’s market-scape, business is the brand and brand is the business. The brand is absorbed, imbued and encompassed in every conceivable experience that the consumer experiences and encounters – and therefore, in effect, every action a company takes.
cutting edge technology, how does RNSSL plan to stay distinctly ahead? “Foreign competition is setting-in in the form of JV’s with local players. But we believe in healthy competition and I suppose there is room for many players,” says R. Narayanan, President, RNSSL. For now, the company is banking on its dependable portfolio of global clients like Honda, Ford, Toyota, Tatas and Maruti Suzuki, but future plans are afoot to invest Rs.20 crore to set up a plant in Singur for supplying parts to Tata’s much hyped ‘Nano’.
mergers and acquisitions (remember the plus-$500 million foreign deals that these giants struck?). That was about two years back. Then came 2007, a period filled with lull and silence and except the R&D (re)search-and-seek game, nothing grand made the headlines in the M&A spirit. It’s 2008 now, and once again comes the crest of activities for the domestic players. And just when we all thought that the pharma kings were following the path tread before (of ‘big-ticket’ acquisitions), something ‘strategically’ interesting has come to surface. Scouting for growth, the industry is turning its back to mega deals when it comes to M&As (even as international players move in for a kill with significant resources), and they have started looking at smaller, strategic acquisitions now.
of the colour red at the moment, it will be the two Indian biggies offering Direct-to-Home (DTH) services. Both Tata Sky and Dish TV are expecting embarrassing red blots (or losses, if you please) to the tune of Rs.1500 crore for FY 2007-08. But ask Vikram Kaushik (CEO of Tata Sky) and Jawahar Goel (Managing Director of Dish TV) and they firmly refuse to press any panic buttons. “These are budget losses,” the duo averred in unison, when quizzed by this magazine, adding that the situation is pretty much under control.
interacts with global markets and becomes more individual-centric, the aspiration to be different from others has found firm roots. If your pal has a Zen, you’d probably opt for SX4, despite having to pay a slightly higher price. And since you’re picking up your preferred set of wheels on EMI anyway, what difference does the price tag make, especially as you are making your own individual statement with the car you prefer. Clearly, with traditional demographic segments blurring, the age of one-size-fits-all is fast disappearing. In sync with the times, marketers are fast dumping their mass marketing fetish and tapping segments within the masses that are growing fast and will add to their riches in the long run.
funds, insurance and other investment instruments. But for Bandyopadhyay the going has never been better. “We will continue to remain bullish in the long run as well as in the short run. We sell a basket of products including loans, credit cards, money transfers, et al, so sensex volatility does not matter in the overall context of our company,” he claims. This CEO believes that with 330 million bank accounts in India and 30 million unique mutual fund folios there is a huge scope for market expansion into hitherto untapped areas.