Empire with No Clothes:
Lessons for India from America
If you are thinking the United States and George W. Bush you are right too, but I am thinking of something closer to my home in India, which may not be that dissimilar. The felling of Saddam Hussein's statue in central Baghdad and the proclamation of victory in the war against Iraq seems a distant memory. What Bush and his advisers forgot was to be ready to manage the empire after the conquest.
Sadly they forgot to take their clothes, and were completely exposed, caught rather embarassingly with their pants down. Three years on George Bush stands as the emperor with no clothes as anarchy reigns in Iraq and the costs of war to his own people rise, be it the loss of life or the drain on resources. The superpower humbled by its own incompetence.
What, you might ask, does this have to do with happenings in India?
Well, something unusual happened last week: an ageing Indian company, no less than a hundred years old took over a much younger and bigger company in Europe. The Tata Steel takeoever of the Anglo-Dutch behemoth Corus Steel was greeted with a chorus of euphoria in India, not dissimilar to the euphoria in America after the fall of Baghdad in 2003.
India, some claim, is now a superpower spreading its economic might and empire, while the Tata's are the army, leading the triumphant charge. A scratch below the surface of triumph conceals a reality check which all in the euphoric chorus would be well advised to take heed of.
Can India possibly claim to be superpower, the new emperor, just because some of it's corporates are taking over firms abroad.
Corporate might hasn't turned into well-being for the majority of the people who still languish in poverty, illiteracy, hunger: basically dismal human conditions. Even possessing a few nuclear weapons doesn't change this fact. And if half a country's population cannot read, feed or cloth itself, what does that say about the empire? Even the American empire seems hollow when it is estimated that one in six people in the US is functionally illiterate, a large number of them live in poverty, where poverty is often a function of race, and where hurricanes like Katrina leave the mighty government fumbling for solutions.
But let's return again to to the Indian empire. What of the valiant army, the foot soldiers, the Tata Group in this case. Are they creatings trong empires or merely those in name but no substance? A closer examination of some of the facts about this takeoever and takeovers in general may shed some light.
To begin, creating an empire, whether corporate or political costs money. And someone has to pay. The Tata's have paid $12.1 billion for Corus. Money that is borrowed and has to be paid back, with interest. Will the new conglomorate be profitable enough to make their investment worthwhile?
One may argue that Tata Steel is now a giant, the fifth largest steel company in the world. But giants aren't always profitable or successful. Look what happened to Corus. Look elsewhere at what is happening to other gigantic firms: General Motors is struggling, so is Ford. And these are legendary firms, which we were told, have sales in excess of the GDP of many developing countries.
But Tata Corus may be different. Possibly. Note, however, the fact that Tata Steel has acquired a firm which is much less efficient than itself, both in terms of profit margins which are about half of Tata's and in terms of costs, which are much higher especially the costs of labour. Thus, the immediate outcome for the combined entity is a fall in profitability and efficieny from the level of Tata Steel.
Think the outcome for Germany after the more prosperous West united with the less prosperous East, and you'll get the picture. Thus, a lot of hard work is needed to pull Tata Corus up. Is Ratan Tata's homework ebtter than George W. Bush's, or is it an act of bravado based more on hope than on hard economic calculus? Have the Tata's over-stretched themselves in order to ' win their battle' (prompted by a jingoistic nation and it's over enthusiastic media) for Corus, against CSN from Brazil? Groege Bush and his army are certainly over-stretched in Iraq, and feeling the heat. Even the highest quality steel can melt under extreme temperatures.
What makes things even more complicated for the Tata's with Corus is that steel is a sunset industry in the West.
The demand for steel and the production of steel in the UK, which is the home of Corus, has fallen steadily over the last thirty years. Steel in a sunrise industry in emerging markets. So it makes sense acquiring firms in say China and Brazil but does it make the same sense acquiring an Anglo-Dutch firm which basically services small and shrinking markets. Again, time will tell, but the outcome is far from certain.
An investigation into the technical side reveals evidence from economic literature on the subject suggesting that mergers and acquisitions do not always lead to higher profits for the new company, or indeed higher share prices. In fact, a lot of evidence from the industrialized countries, where a majority of mergers and acquisitions have hitherto occurred, shows the opposite. What does happen for certain is a downsizing of jobs.
Acquiring a firm in a different country brings its own adjustment problems. A probable clash of managerial and worker cultures. A resistance to control by a firm seen to be from the developing world. Again the analogy with what the Americans are facing in Iraq is obvious.
If this is sounding very pessimistic, let it not. It is not meant to be. The Tata's have achieved a lot, both in India and abroad, especially under the able stewardship of Ratan Tata. In fact, some of their earlier acquisitions of steel firms in Thailand and Singapiore made good sense. As did their takeoever of the bankrupt Daewoo Commercial Vehicles at a very reasonable price. India as a country, too, has made great strides over the last sixty years.
But proclamations of conquest, and of empire, or of superpower status seem premature. Almost like hubris before a fall. Just like Iraq 2003. Caution is the better part of valor, and the enthusiasts would do well to temper their emotions, and let those in charge do their homework dilligently, without the pressure of jingoism and nationalism. The outcomes, in that case, are likely to be way superior.
It would seem wiser to be in a situation where one is all dressed up with nowhere to go, than to rush towards an empire with no clothes.
http://3quarksdaily.blogs.com/3quarksdaily...e_with_no_.html
Full Version: Empire With No Clothes: Indian Delusion !
no clothes? No problem! it worked for Mahatma Ghandi didnt it!
India has more people living below the poverty line than everyone else in the world put together. If anything its the 'Empire of the Damned'.
however, indians are easily pleased and have an infinite capacity for delusion. $18 billion worth of takeovers with borrowed money and they are kinds of the Universe!
Bottom line is China gets more investment in a month than india gets in a year. Pakistan will recieve around $5 billion worth of investment this year which is not even half of what India will get and they are 7 times bigger!
The Chinese stock market drops in corrdction and $100 billion is wiped of the UK stock market. so who is more important? who is more powerful?
india also has a bad lack of toilets. 400 million people crapping in public because they have not toilet to crap in.
what a superp power or should I say 'shupa pavar'.
these are the ground realities.
There are lot of Indian members here dancing and jumping that two Indian companiese have acquired overseas assets. And in general the entire Indian nation have all of sudden come to realise that "India is taking over the world".
This delusion is being created and spread on so huge scale that people dont want to even know what are the consequences of these steps. The westren media is creating a hype of this and pushing Indian's further deep in to delusion that they are a "superpower".
No one in entire one and half billion people come out and asked that what would happen next;
1. Majority of TATA investors are Indian working overseas, who have invested their savings of life, what would be consequences for them when TATA is buying a dying company.
2. The loans which are being taken by TATA have huge intrests and what would be the effects on local economy as no doubt TATA have acquired a less profitable company, what would be impect on local economy?
3. Warren Buffet is predicting a sharp decline in $ value and his company is buying non US assets, what would happen if $ goes down and stocks of arcelor decline 20-50%? He would have bought arcelor if he would have seen it as a good deal !
4. Would Indian economy be able to absorb a shock of "Enron" if things go in the direction most of Economists are predicting?
I hope some Indian intellectual here can shed a light on that all, they jump and dance when wallmart opens a store and as well if TATA gifts them a "superpower".
ps; in case of ACDC, i would request not to make so many parts of the article.
This delusion is being created and spread on so huge scale that people dont want to even know what are the consequences of these steps. The westren media is creating a hype of this and pushing Indian's further deep in to delusion that they are a "superpower".
No one in entire one and half billion people come out and asked that what would happen next;
1. Majority of TATA investors are Indian working overseas, who have invested their savings of life, what would be consequences for them when TATA is buying a dying company.
2. The loans which are being taken by TATA have huge intrests and what would be the effects on local economy as no doubt TATA have acquired a less profitable company, what would be impect on local economy?
3. Warren Buffet is predicting a sharp decline in $ value and his company is buying non US assets, what would happen if $ goes down and stocks of arcelor decline 20-50%? He would have bought arcelor if he would have seen it as a good deal !
4. Would Indian economy be able to absorb a shock of "Enron" if things go in the direction most of Economists are predicting?
I hope some Indian intellectual here can shed a light on that all, they jump and dance when wallmart opens a store and as well if TATA gifts them a "superpower".
ps; in case of ACDC, i would request not to make so many parts of the article.
I think this super power delusion has to do with the overwhelming amount of people in India. Because they are so many of them on top of each other in that country that they actually think this is the only world, much like the US baseball world cup.
But seriously, most of these delusioned Indians are probably from the Brahmin class who actually can't see anybody besides their own cast. So for them everyone is doing pretty good and well off and the country is really under populated.
But seriously, most of these delusioned Indians are probably from the Brahmin class who actually can't see anybody besides their own cast. So for them everyone is doing pretty good and well off and the country is really under populated.
QUOTE(umiqum @ Mar 1 2007, 12:59 PM) [snapback]870337[/snapback]
But seriously, most of these delusioned Indians are probably from the Brahmin class who actually can't see anybody besides their own cast. So for them everyone is doing pretty good and well off and the country is really under populated.
true say, bro.
QUOTE(MirBadshah @ Mar 1 2007, 08:19 AM) [snapback]870230[/snapback]
There are lot of Indian members here dancing and jumping that two Indian companiese have acquired overseas assets. And in general the entire Indian nation have all of sudden come to realise that "India is taking over the world".
This delusion is being created and spread on so huge scale that people dont want to even know what are the consequences of these steps. The westren media is creating a hype of this and pushing Indian's further deep in to delusion that they are a "superpower".
No one in entire one and half billion people come out and asked that what would happen next;
1. Majority of TATA investors are Indian working overseas, who have invested their savings of life, what would be consequences for them when TATA is buying a dying company.
2. The loans which are being taken by TATA have huge intrests and what would be the effects on local economy as no doubt TATA have acquired a less profitable company, what would be impect on local economy?
3. Warren Buffet is predicting a sharp decline in $ value and his company is buying non US assets, what would happen if $ goes down and stocks of arcelor decline 20-50%? He would have bought arcelor if he would have seen it as a good deal !
4. Would Indian economy be able to absorb a shock of "Enron" if things go in the direction most of Economists are predicting?
I hope some Indian intellectual here can shed a light on that all, they jump and dance when wallmart opens a store and as well if TATA gifts them a "superpower".
ps; in case of ACDC, i would request not to make so many parts of the article.
we jump up and down just because you inspire us to... enough said.. most of us dont give a #### about who is taking over whom in india. whats more important to us is that if we are progressing and inshallah that is happening.
QUOTE(mubeen @ Mar 1 2007, 03:45 PM) [snapback]870381[/snapback]
we jump up and down just because you inspire us to... enough said.. most of us dont give a #### about who is taking over whom in india. whats more important to us is that if we are progressing and inshallah that is happening.
This is really pathetic. Billions of dollars, way overrated by commercial standard, is used to buy a European company that provides jobs for high-wage western workers.
India still needs steel for its infrasture building, but can you use these steel produced by that new purchased company? No, you simply can't afford with that wage.
What's the benefit to ordinary Idians? Probably nothing, the money spent can't make you produce more steel, can't make you employ more people. What's the benefit to the Tata? Probably not much as well, price is so high and it will take long long time to cover the cost, plus European union is tough and will raise your production cost a lot in the future.
At the end you get a name but nothing much else.
CORUS ACQUISITON a BIG MISTAKE UNLESS
if you live in a 1000sq ft condo and want to buy a pet then buy a dog or a cat but not a elephant...
tata bought a compay too big with completely different culture People in europe will not work 10-12hrs/day wih low wages and without benefits... tata is in for a rude shock
the only thing they can salvage out of this deal is to quickly understand the technology used to produce steel (much superior than whhat they have in India) and put it to use to meet growing local demand..
sonner or later they will start closing plants and cutting jobs to maintain profitability
if you live in a 1000sq ft condo and want to buy a pet then buy a dog or a cat but not a elephant...
tata bought a compay too big with completely different culture People in europe will not work 10-12hrs/day wih low wages and without benefits... tata is in for a rude shock
the only thing they can salvage out of this deal is to quickly understand the technology used to produce steel (much superior than whhat they have in India) and put it to use to meet growing local demand..
sonner or later they will start closing plants and cutting jobs to maintain profitability
QUOTE(VTec @ Mar 1 2007, 05:17 PM) [snapback]870427[/snapback]
CORUS ACQUISITON a BIG MISTAKE UNLESS
The Indian media which is obviously controlled by "Big Guys" is giving an impression that "India is taking over the world" and have become a "superpower" because of TATA deal.
The delusioned Indian's which get every theory from Hollywood are jumping, no one is going to agree that this is a mistake.
Vtek you really think yourself to know than tatas managemement does is it so?
maybe people should read this a little bit,
Stop Talking Down to India About That Rising Tide: Amity Shlaes
By Amity Shlaes
Feb. 28 (Bloomberg) -- When BBC television aired a show about India's economy recently there was something predictable about the language.
``Does India care about its poorest citizens?'' asked the host
, Allan Little.
Little had a guest in the New Delhi studio, Gurcharan Das, formerly Procter & Gamble Co.'s top executive in India. ``Are you an advocate of trickle-down theory?'' Little asked.
``Everyone doesn't rise equally, but eventually studies have shown all boats do rise,'' Das answered.
The program then took phone-in statements about India's economy. The ones from India tended to side with Das; the outsiders leaned toward Little. This, too, came as no surprise.
Why the familiarity? India's growth rate, forecast at more than 9 percent this year, has everyone in the world re-examining the Indian model and what India can do for its poor.
The language echoes that of U.S. or U.K. policy debates. Indeed, you can go further and say that when Westerners talk about income distribution in India, they are often really talking about themselves as well.
Consider the dynamic. Just last year, as her determination to run for president was hardening, Hillary Clinton of New York told the Democratic Leadership Council that the U.S. should ``replace trickle-down economies with rise-up economies.'' She was trying to invoke Franklin Roosevelt's New Dealers, who spoke with disdain about ``trickle down.''
Policy Vindication
The argument was feeble since a lot of the U.S. wealth in the past few decades has trickled quite nicely. In the U.K., the Labour Party has been at war with itself ever since Margaret Thatcher's policies vindicated the rising-tide concept.
India still has enormous poverty, and so provides a more logical backdrop for an income-distribution argument. Those who write traditional aid policy have already grasped this. So have some politicians.
In 2005, when he was preparing for his presidential run, John Edwards traveled to India to tell an audience that the world ``must also do more to help the millions of children in our countries who grow up poor.'' Did Edwards care about malaria or AIDS? Yes. Was he also trying to improve his case for higher taxes or other redistributionist efforts in battleground states such as Ohio? Absolutely.
And this, of course, isn't the first time that Westerners have imposed their preoccupations -- economic or political -- upon India. Aside from the obvious example of colonial rule, it is important to remember the postcolonial influence: the philosophy of the British and U.S. inspired India's economic policies for so many decades. After all, former Indian Prime Minister Jawaharlal Nehru got his ideas in the U.K., first at Harrow and then at Trinity College.
Go Left
Westerners likewise blessed Nehru's decision to follow the far-left model of the Soviet Union. They told the Indians that while economic redistribution, or import substitution, might not be right for the U.S., they made sense for India. John F. Kennedy was the one who first uttered the ``rising tide'' phrase while addressing Germans in 1963. But Kennedy's choice for ambassador to India, economist John Kenneth Galbraith, emphasized government controls and redistribution in his work.
The consequences of such Western-Indian interactions were worse than negative for India, as Das himself has pointed out. In an article in the journal Foreign Affairs, Das noted that while average per-capita gross domestic product growth was 3 percent or so for the developing world between 1950 and 1980, it was half that for India with its Five-Year Plans.
Lee Kwan Yew, Singapore minister mentor, recently provided a blunter analysis: ``Like Nehru, I had been influenced by the ideas of the British Fabian Society. But I soon realized that before distributing the pie I had first to bake it.''
Role Reversal
Nowadays, India seems to be transcending that past. It has already succeeded in reversing the growth ratio. Rather than lagging behind other developing countries, India is outpacing them. GDP per capita is rising, too.
As Das noted on the same BBC show -- to the displeasure of a caller from Vancouver -- the recent growth has lifted about 200 million Indians out of poverty. The sort of softer measures that redistributionists like also make the recent policies look good.
The United Nations Human Development Index quantifies national wellbeing by considering gauges such as literacy and infant mortality, and then ranks the countries. Since 1975, India has risen 10 spots, while Bangladesh is up four and China seven. The market-oriented policies that produced this acceleration have been endorsed repeatedly by Indian voters.
Genuine Goodwill
Given this record, it is surprising that anyone in the U.S. or Britain even dares to advise, let alone ask, as the BBC did, whether India can consider itself a success story.
Still, they persist. Geopolitics may be one concern: Leaders in both capitals want to keep India stable and friendly. Genuine goodwill is another.
There's a third reason: they want to moralize, to influence.
This is a shame, for retreating into a policy of redistribution is about the last thing the Indian government should do right now. The best policy, therefore, is to forgo having our say and let the Indians have theirs.
^^ enuff said.
Another this...
Mumbai: A buoyant stock market and sustained investor interest has helped India catch up with developed markets in terms of market capitalisation to GDP ratio.
With the benchmark BSE index peaking to 14,724 points this month, market capitalisation of the country rose to 91.5 per cent of GDP. This compares favourably with mature economies like Japan (96 per cent) and South Korea ( 94.1 per cent). As against this, China's market capitalisation was just 33.3 per cent of GDP at the end of 2006, according to the Economic Survey tabled in the Parliament.
The market value of Indian stocks was second highest among all emerging markets, surpassing those of markets like Thailand, Malaysia, South Korea and Taiwan at the end of 2006.
"Improved investor awareness and expanding equity cult among the small savers appear to augur well for buoyant stock markets," the survey said.
Market cap in terms of GDP indicates the relative size of capital market, besides investor confidence and discounted future earnings of corporate sector.
Financial and regulatory reforms of capital market, together with accelerated economic growth and macroeconomic stability, sustained the investors' confidence in the country's capital market, the survey said.
The expectations of higher corporate investment and earnings, robust GDP growth combined with the economic reforms are expected to make India the preferred destination of foreign institutional investors, the survey added.
http://www.domain-b.com/investments/market...italisation.htm
maybe people should read this a little bit,
QUOTE
Stop Talking Down to India About That Rising Tide: Amity Shlaes
By Amity Shlaes
Feb. 28 (Bloomberg) -- When BBC television aired a show about India's economy recently there was something predictable about the language.
``Does India care about its poorest citizens?'' asked the host
, Allan Little.
Little had a guest in the New Delhi studio, Gurcharan Das, formerly Procter & Gamble Co.'s top executive in India. ``Are you an advocate of trickle-down theory?'' Little asked.
``Everyone doesn't rise equally, but eventually studies have shown all boats do rise,'' Das answered.
The program then took phone-in statements about India's economy. The ones from India tended to side with Das; the outsiders leaned toward Little. This, too, came as no surprise.
Why the familiarity? India's growth rate, forecast at more than 9 percent this year, has everyone in the world re-examining the Indian model and what India can do for its poor.
The language echoes that of U.S. or U.K. policy debates. Indeed, you can go further and say that when Westerners talk about income distribution in India, they are often really talking about themselves as well.
Consider the dynamic. Just last year, as her determination to run for president was hardening, Hillary Clinton of New York told the Democratic Leadership Council that the U.S. should ``replace trickle-down economies with rise-up economies.'' She was trying to invoke Franklin Roosevelt's New Dealers, who spoke with disdain about ``trickle down.''
Policy Vindication
The argument was feeble since a lot of the U.S. wealth in the past few decades has trickled quite nicely. In the U.K., the Labour Party has been at war with itself ever since Margaret Thatcher's policies vindicated the rising-tide concept.
India still has enormous poverty, and so provides a more logical backdrop for an income-distribution argument. Those who write traditional aid policy have already grasped this. So have some politicians.
In 2005, when he was preparing for his presidential run, John Edwards traveled to India to tell an audience that the world ``must also do more to help the millions of children in our countries who grow up poor.'' Did Edwards care about malaria or AIDS? Yes. Was he also trying to improve his case for higher taxes or other redistributionist efforts in battleground states such as Ohio? Absolutely.
And this, of course, isn't the first time that Westerners have imposed their preoccupations -- economic or political -- upon India. Aside from the obvious example of colonial rule, it is important to remember the postcolonial influence: the philosophy of the British and U.S. inspired India's economic policies for so many decades. After all, former Indian Prime Minister Jawaharlal Nehru got his ideas in the U.K., first at Harrow and then at Trinity College.
Go Left
Westerners likewise blessed Nehru's decision to follow the far-left model of the Soviet Union. They told the Indians that while economic redistribution, or import substitution, might not be right for the U.S., they made sense for India. John F. Kennedy was the one who first uttered the ``rising tide'' phrase while addressing Germans in 1963. But Kennedy's choice for ambassador to India, economist John Kenneth Galbraith, emphasized government controls and redistribution in his work.
The consequences of such Western-Indian interactions were worse than negative for India, as Das himself has pointed out. In an article in the journal Foreign Affairs, Das noted that while average per-capita gross domestic product growth was 3 percent or so for the developing world between 1950 and 1980, it was half that for India with its Five-Year Plans.
Lee Kwan Yew, Singapore minister mentor, recently provided a blunter analysis: ``Like Nehru, I had been influenced by the ideas of the British Fabian Society. But I soon realized that before distributing the pie I had first to bake it.''
Role Reversal
Nowadays, India seems to be transcending that past. It has already succeeded in reversing the growth ratio. Rather than lagging behind other developing countries, India is outpacing them. GDP per capita is rising, too.
As Das noted on the same BBC show -- to the displeasure of a caller from Vancouver -- the recent growth has lifted about 200 million Indians out of poverty. The sort of softer measures that redistributionists like also make the recent policies look good.
The United Nations Human Development Index quantifies national wellbeing by considering gauges such as literacy and infant mortality, and then ranks the countries. Since 1975, India has risen 10 spots, while Bangladesh is up four and China seven. The market-oriented policies that produced this acceleration have been endorsed repeatedly by Indian voters.
Genuine Goodwill
Given this record, it is surprising that anyone in the U.S. or Britain even dares to advise, let alone ask, as the BBC did, whether India can consider itself a success story.
Still, they persist. Geopolitics may be one concern: Leaders in both capitals want to keep India stable and friendly. Genuine goodwill is another.
There's a third reason: they want to moralize, to influence.
This is a shame, for retreating into a policy of redistribution is about the last thing the Indian government should do right now. The best policy, therefore, is to forgo having our say and let the Indians have theirs.
^^ enuff said.
Another this...
QUOTE
Mumbai: A buoyant stock market and sustained investor interest has helped India catch up with developed markets in terms of market capitalisation to GDP ratio.
With the benchmark BSE index peaking to 14,724 points this month, market capitalisation of the country rose to 91.5 per cent of GDP. This compares favourably with mature economies like Japan (96 per cent) and South Korea ( 94.1 per cent). As against this, China's market capitalisation was just 33.3 per cent of GDP at the end of 2006, according to the Economic Survey tabled in the Parliament.
The market value of Indian stocks was second highest among all emerging markets, surpassing those of markets like Thailand, Malaysia, South Korea and Taiwan at the end of 2006.
"Improved investor awareness and expanding equity cult among the small savers appear to augur well for buoyant stock markets," the survey said.
Market cap in terms of GDP indicates the relative size of capital market, besides investor confidence and discounted future earnings of corporate sector.
Financial and regulatory reforms of capital market, together with accelerated economic growth and macroeconomic stability, sustained the investors' confidence in the country's capital market, the survey said.
The expectations of higher corporate investment and earnings, robust GDP growth combined with the economic reforms are expected to make India the preferred destination of foreign institutional investors, the survey added.
http://www.domain-b.com/investments/market...italisation.htm
QUOTE(ac/dc @ Mar 1 2007, 06:44 PM) [snapback]870508[/snapback]
Vtek you really think yourself to know than tatas managemement does is it so?
maybe people should read this a little bit,
What this whole page you have posted here have to do with this thread?
We were expecting something wiser from intellectuals here who were jumping to discuss the TATA deal not for an advice to look up or down on India, such moron corporate leaders are every where making these stupid statements, it is nothing new and have nothing to do with the blunders they are making.
I dont know about steel but i can tell u about tcs
While i was in India i had several contractors from TCS for a software development project i was managing..
i can tell u one thing... out of 10 managers in TCS i met 9 are dumb and the company runs bcoz of 1-2 handful ones.
TCS Infosys Wipro are big business because they bid the lowest in our auctions for software development projects.. tomorrow if a s/w company from china or philippines or timbuktoo bids lower the business will go there..
TCS hires fresh graduates pays them 25,000rupees/month and makes them work 12-15 hrs a day and keeps its labour cost low...given the high infrastructure costs in india sooner then later some country will catch up and there will be mass unemployment and IT which is the main contributor to the economic boom will grow not so fast...
North America cuts jobs in its own country and outsoruced it will not have sympathy for any other country...if goods are manufactured cheaper in X country than China then production will move there...
Every day in Canadian newspapers you will hear of job cuts
today the whole world is looking for the cheapest place to get things done thats is why inheriting the pension and wages of several thousand employees in highly developed labour regulated countries for a comapny in a developing country where almost anything goes is a BIG mistake
TATA gets 2 benefits:
1) Access to the steel market in Europe
2) Cutting edge technology
Thats why i say the sooner they bring the technology to india and close plants in Europe the better it is for them because everyone wants goods at a cheaper cost.. a european car manufacturer will buy steel from the lowest price bidder and not bcoz the manufacturer is european So while option 1 is a benefit now till they do not execute option 2 and supply the european market with steel using european technology made using cheap labour cost in india the acquisition will be a big mistake.
Even if they execute option 2 they will still have to compete globally and close plants in eruope and give huge benefits to those they layoff... will it be worth it is anybody's quess and my guess is that they paid just too much
While i was in India i had several contractors from TCS for a software development project i was managing..
i can tell u one thing... out of 10 managers in TCS i met 9 are dumb and the company runs bcoz of 1-2 handful ones.
TCS Infosys Wipro are big business because they bid the lowest in our auctions for software development projects.. tomorrow if a s/w company from china or philippines or timbuktoo bids lower the business will go there..
TCS hires fresh graduates pays them 25,000rupees/month and makes them work 12-15 hrs a day and keeps its labour cost low...given the high infrastructure costs in india sooner then later some country will catch up and there will be mass unemployment and IT which is the main contributor to the economic boom will grow not so fast...
North America cuts jobs in its own country and outsoruced it will not have sympathy for any other country...if goods are manufactured cheaper in X country than China then production will move there...
Every day in Canadian newspapers you will hear of job cuts
today the whole world is looking for the cheapest place to get things done thats is why inheriting the pension and wages of several thousand employees in highly developed labour regulated countries for a comapny in a developing country where almost anything goes is a BIG mistake
TATA gets 2 benefits:
1) Access to the steel market in Europe
2) Cutting edge technology
Thats why i say the sooner they bring the technology to india and close plants in Europe the better it is for them because everyone wants goods at a cheaper cost.. a european car manufacturer will buy steel from the lowest price bidder and not bcoz the manufacturer is european So while option 1 is a benefit now till they do not execute option 2 and supply the european market with steel using european technology made using cheap labour cost in india the acquisition will be a big mistake.
Even if they execute option 2 they will still have to compete globally and close plants in eruope and give huge benefits to those they layoff... will it be worth it is anybody's quess and my guess is that they paid just too much
sorry repeat post
I am not criticizing TATA it is a business decison they made its now for the world to see how it works out..
I ma hving problem with people calling india a economic superpower becaue of the acquisition..
I also dont mind companies in india are growing fast i helps raise the level of middle class but in india middle class is anyway well off its the poor class that is the problem..
Having big companies does not solve the problem of improving the standard of poor people, Here in toronto and surrounding area it is estimated that 70% of the working polulation earn 8-12$ an hour which is just hand to mouth existance. Definately not as bad living conditions in india but it is nothing to write home about..
all i am saying is that countries become truly mature and powerful when the poeple are empowered and the tata corus deal is not helping in that regard
I ma hving problem with people calling india a economic superpower becaue of the acquisition..
I also dont mind companies in india are growing fast i helps raise the level of middle class but in india middle class is anyway well off its the poor class that is the problem..
Having big companies does not solve the problem of improving the standard of poor people, Here in toronto and surrounding area it is estimated that 70% of the working polulation earn 8-12$ an hour which is just hand to mouth existance. Definately not as bad living conditions in india but it is nothing to write home about..
all i am saying is that countries become truly mature and powerful when the poeple are empowered and the tata corus deal is not helping in that regard
QUOTE(VTec @ Mar 1 2007, 08:14 PM) [snapback]870555[/snapback]
TATA gets 2 benefits:
1) Access to the steel market in Europe
2) Cutting edge technology
Thats why i say the sooner they bring the technology to india and close plants in Europe the better it is for them because everyone wants goods at a cheaper cost..
LOL, this is why I said I don't understand Indian mentality and that sounds soooo unrealistic.
1.
Europe market(plus US and Canada) have been steadily shrinking for quite long already. The biggest market is China today, even India itself looks more promising. For $10 billion something I will definitely choose to build a new one in India.
2
Commercial steel making has very little secret today, you just need to buy the cutting edge equipment which are available in the market freely, as long as you have the money, Why don't buy equipments and build in India? South Korea didn't have any steel mill 30 years ago, now they have a cutting edge steel industry since they have the capital, it's just that simple.
And, you can't just transfer the technology to India and close the factory. You need to transfer the whole factory to India as I said equipments are more important. That's why China has been buying the 2nd-hand steel-making equipments in the west all the time and sending them back - most of them are from bankrupted western steel mills and sold as the waste steel.
Seems you don't understand European labor law and commercial rules there - you can't just close the mill and go home - the union will sue you and the government will fine you. It's not that easy to rid them off.
I predict that the Indians will become victims of their own propaganda. Indian intellectuals are bragging about India everywhere. BBC is specially pro-India and anti-china. It is really sickening.
QUOTE(cyberena @ Mar 2 2007, 03:26 AM) [snapback]870671[/snapback]
I predict that the Indians will become victims of their own propaganda. Indian intellectuals are bragging about India everywhere. BBC is specially pro-India and anti-china. It is really sickening.
cyberena i suggest you read the article i posted...
the west is trying to impose the way it wants things on us which isnt going to happen.
you should know we are a democracy and there are will be massive criticism always.
and unlike china style government our growth will have to cross many hurdles of "Reforming" various sectors.
Lee Kwan Yew, Singapore minister mentor, recently provided a blunter analysis: ``Like Nehru, I had been influenced by the ideas of the British Fabian Society. But I soon realized that before distributing the pie I had first to bake it.''
QUOTE(cyberena @ Mar 2 2007, 03:26 AM) [snapback]870671[/snapback]
I predict that the Indians will become victims of their own propaganda. Indian intellectuals are bragging about India everywhere. BBC is specially pro-India and anti-china. It is really sickening.
Just click on Google "India a Superpower", you would find around 2 million articles, some predicting that India have alredy became a superpower, other saying it is taking over the world.
Few of these articles are from west, most of these are from Indian intellectuals, right from government officials, think tanks, analyists and knowned columnists.
This is called a state of "National Delusion", offcourse it is sickening, because whole nation is trapperd in to a fantacy of becomming a superpower (basic idea from bollywood).
Now if some Indian claims that west is trying to impose this image on them, he is obviously more sick then others, he is simply denieng that their nation is sick and delusioned.
moved
QUOTE(VTec @ Mar 1 2007, 08:14 PM) [snapback]870555[/snapback]
I dont know about steel but i can tell u about tcs
While i was in India i had several contractors from TCS for a software development project i was managing..
i can tell u one thing... out of 10 managers in TCS i met 9 are dumb and the company runs bcoz of 1-2 handful ones.
TCS Infosys Wipro are big business because they bid the lowest in our auctions for software development projects.. tomorrow if a s/w company from china or philippines or timbuktoo bids lower the business will go there..
TCS hires fresh graduates pays them 25,000rupees/month and makes them work 12-15 hrs a day and keeps its labour cost low...given the high infrastructure costs in india sooner then later some country will catch up and there will be mass unemployment and IT which is the main contributor to the economic boom will grow not so fast...
North America cuts jobs in its own country and outsoruced it will not have sympathy for any other country...if goods are manufactured cheaper in X country than China then production will move there...
Every day in Canadian newspapers you will hear of job cuts
today the whole world is looking for the cheapest place to get things done thats is why inheriting the pension and wages of several thousand employees in highly developed labour regulated countries for a comapny in a developing country where almost anything goes is a BIG mistake
TATA gets 2 benefits:
1) Access to the steel market in Europe
2) Cutting edge technology
Thats why i say the sooner they bring the technology to india and close plants in Europe the better it is for them because everyone wants goods at a cheaper cost.. a european car manufacturer will buy steel from the lowest price bidder and not bcoz the manufacturer is european So while option 1 is a benefit now till they do not execute option 2 and supply the european market with steel using european technology made using cheap labour cost in india the acquisition will be a big mistake.
Even if they execute option 2 they will still have to compete globally and close plants in eruope and give huge benefits to those they layoff... will it be worth it is anybody's quess and my guess is that they paid just too much
Even outsourcing has its pitfalls and i can tell u that unions in Europe are much stronger than the U.S. and ppl are more touchy abt outsourcing.They might be thinking of closing down the plants,but i highly doubt it,severance packages etc,highly unlikely.Even if they do move,where do they get their raw materials?if the mining is done in europe itself,it wud be unimaginable to move the raw materials to india,too costly.In either case,i think its the same old story,a richer coporation buying out a struggling, poorer corporation hoping that the injection of some capital can kick start it,and that too the article points out is mostly financed.The home country and the business being bought is more than happy,they want to get rid of their miseries.Now what does TATA have to offer to make this struggling business work?
This indian superpower song is a drug that the whole 60% or more below avg popultion is being fed just to distract from their own miseries and the politicians and economists want to give a positive outlook of india as well,its a publicity stunt.It does work if u consider the foriegn investment and the reason is simple.india has a huge population,large labor force at the same place where ppl can go and get things done.some countries might have a lower labor cost and have better skiled labor but then foreign companies might have to jump thru red tape and all that bullshit of 10 different countries to get access to the same # of laborers and dont kid urself,majority of this is still call centres and IT/software.cheap programing and hello this is mark jobs.But as soon as a country with some sizeable population emerges which can compete with them,India will find it hard.I have many friends who had to visit India for business and they tell me how awful it was,and the disparity between the poor and the rich disgusted them.VIRTUALLY EVERY CHARITY IN NORTH AMERICAN USES EITHER AFRICA OR INDIA as its target,and after programing,india is most famous for its poverty and population.
AC/DC lets not talk abt india not bowing to the west.Iran pipeline is being delayed only bcoz of U.S. pressure and theres been a shift in indian foreign policy all bcoz of the new found love between india and the west.
QUOTE(haroons222 @ Mar 2 2007, 03:58 PM) [snapback]870713[/snapback]
Even outsourcing has its pitfalls and i can tell u that unions in Europe are much stronger than the U.S. and ppl are more touchy abt outsourcing.They might be thinking of closing down the plants,but i highly doubt it,severance packages etc,highly unlikely.Even if they do move,where do they get their raw materials?if the mining is done in europe itself,it wud be unimaginable to move the raw materials to india,too costly.In either case,i think its the same old story,a richer coporation buying out a struggling, poorer corporation hoping that the injection of some capital can kick start it,and that too the article points out is mostly financed.The home country and the business being bought is more than happy,they want to get rid of their miseries.Now what does TATA have to offer to make this struggling business work?
This indian superpower song is a drug that the whole 60% or more below avg popultion is being fed just to distract from their own miseries and the politicians and economists want to give a positive outlook of india as well,its a publicity stunt.It does work if u consider the foriegn investment and the reason is simple.india has a huge population,large labor force at the same place where ppl can go and get things done.some countries might have a lower labor cost and have better skiled labor but then foreign companies might have to jump thru red tape and all that bullshit of 10 different countries to get access to the same # of laborers and dont kid urself,majority of this is still call centres and IT/software.cheap programing and hello this is mark jobs.But as soon as a country with some sizeable population emerges which can compete with them,India will find it hard.I have many friends who had to visit India for business and they tell me how awful it was,and the disparity between the poor and the rich disgusted them.VIRTUALLY EVERY CHARITY IN NORTH AMERICAN USES EITHER AFRICA OR INDIA as its target,and after programing,india is most famous for its poverty and population.
AC/DC lets not talk abt india not bowing to the west.Iran pipeline is being delayed only bcoz of U.S. pressure and theres been a shift in indian foreign policy all bcoz of the new found love between india and the west.
I don't think europe has any iron ore, well according to http://en.wikipedia.org/wiki/Iron_ore which in turn cited to reputed source. So getting the technology and market is the main aspect of acquisition. India is exporting nearly 5-10billion $ of iron ore annually ,which can be better diverted to indian industry.
QUOTE(kallu_be @ Mar 2 2007, 05:36 AM) [snapback]870719[/snapback]
. India is exporting nearly 5-10billion $ of iron ore annually ,which can be better diverted to indian industry.
You mean send that ore to europe for processing and then bring back the finished products?
I believe these units are not in India which TATA have acquired, how you think that that would be diverted to India, but if we take as you are saying then 5-10 Billion of local ore and cheap labout at home, they must have set up new units inside india rather then buying a foreign company.
You got my point?
QUOTE(MirBadshah @ Mar 2 2007, 04:12 PM) [snapback]870720[/snapback]
You mean send that ore to europe for processing and then bring back the finished products?
I believe these units are not in India which TATA have acquired, how you think that that would be diverted to India, but if we take as you are saying then 5-10 Billion of local ore and cheap labout at home, they must have set up new units inside india rather then buying a foreign company.
You got my point?
I think TATA buyout of CORUS is more linked to strategic perspective than just for showing of the quantity of steel the company produces. Buying CORUS opens up the gate for the vast European markets, TATA is already building new steel factories in jarkhand and chattisghad in india and buying chorus will give instant access to market. All it has to do is to manage existing factories of chorus effectively.
QUOTE(kallu_be @ Mar 2 2007, 09:59 PM) [snapback]870725[/snapback]
I think TATA buyout of CORUS is more linked to strategic perspective than just for showing of the quantity of steel the company produces. Buying CORUS opens up the gate for the vast European markets, TATA is already building new steel factories in jarkhand and chattisghad in india and buying chorus will give instant access to market. All it has to do is to manage existing factories of chorus effectively.
Let me point out one thing to u and all ur other indian friends.
WHen u get loan and buy out somthing u dont go around calling ur self superpower since what uve bought is on loan and when the banks asks for their money u will have to pay it back to them, u defult there goes ur credit rating and ur steel mills on autions. SO if u say indian companies spend $10billion u guys are plane wrong. There is difference between EQUITY and LOANS. Beside TATA paid heafty amount to get these firms but they wont provide much.
Now on second part. FOR TATA to run CORUS it has to offering pay according to european standards not Indian. So it will have to Pay at least $30,000+ to each worker and the safety measure are strong enough to make TATA worried. Now how will TATA be able to manage such firms in west when it is used to the condition at home. Now if u are suggestion TATA will shut down CORUS and than it will gain excess to european market than mate it would be the most dumbest decision eva made. Now TATA might be able to run these firms but it will also have to keeps its interest in the basket. B4 CORUS was competator so TATA was able to compete with lower prices now its not the case. I think this time TATA has bought somthing that is way too heavy for it to carry. Ill be interest to see how this turns out to be.
A wise decision would have been to build more plants at home and challange directly the market share of CORUS...
QUOTE(ac/dc @ Mar 2 2007, 02:49 AM) [snapback]870676[/snapback]
cyberena i suggest you read the article i posted...
the west is trying to impose the way it wants things on us which isnt going to happen.
you should know we are a democracy and there are will be massive criticism always.
and unlike china style government our growth will have to cross many hurdles of "Reforming" various sectors.
Lee Kwan Yew, Singapore minister mentor, recently provided a blunter analysis: ``Like Nehru, I had been influenced by the ideas of the British Fabian Society. But I soon realized that before distributing the pie I had first to bake it.''
You still think it is the west that is trying to impose its will on India? Most of these articles are written by the Indians themselves. If the Chinese start writing English articles about China is going to be a superpower, the western media will then use this as proof of Chinese nationalism rising.
QUOTE(MirBadshah @ Mar 2 2007, 03:07 AM) [snapback]870684[/snapback]
Just click on Google "India a Superpower", you would find around 2 million articles, some predicting that India have alredy became a superpower, other saying it is taking over the world.
Few of these articles are from west, most of these are from Indian intellectuals, right from government officials, think tanks, analyists and knowned columnists.
This is called a state of "National Delusion", offcourse it is sickening, because whole nation is trapperd in to a fantacy of becomming a superpower (basic idea from bollywood).
Now if some Indian claims that west is trying to impose this image on them, he is obviously more sick then others, he is simply denieng that their nation is sick and delusioned.
Not to mention some western journalists shamelessly are inflaming China vs. India debates mostly on BBC. If you ask a Chinese official today if China is a superpower, he/she will most likely tell you China is still a poor and developing country. Even Hu made it clear China is still going to focus on domestic affairs first for the coming years. Had the Chinese start bragging about China is going to become a superpower, the western media will saying this is the proof that China is trying to dominate the world.
Its funny to see people arguing about whether TATA did a good or bad acquisition without having any information about these two companies...I didnt see ppl criticising the acquisition of Arcelor by Mittal. Also i dont see how this is relevant to Pakistani economy.
reasons as given by TATA for merger:
1. The merger is estimated to produce savings of 350 million saving every year.
2. Consolidation is the name of the game im steel industry. Its either buy or be bought
3. Teschnology and a good R&D team
3. Globally supply chain of steel is structured such that u create mills near the consumer market and get semi finished products or raw material from outside.
Now the main doubts are whether TATA has the managerial competency to run the company. That cant be estimated by us. So to criticise the merger will be foolish. Also, the buy was financed by a large number of banks (leveraged buyout). So they also seem to think that this merger will produce good results. Time will whether it was a wise decision or not.
The merger being thought of as an "Indian Takeover" is just a propoganda.
reasons as given by TATA for merger:
1. The merger is estimated to produce savings of 350 million saving every year.
2. Consolidation is the name of the game im steel industry. Its either buy or be bought
3. Teschnology and a good R&D team
3. Globally supply chain of steel is structured such that u create mills near the consumer market and get semi finished products or raw material from outside.
Now the main doubts are whether TATA has the managerial competency to run the company. That cant be estimated by us. So to criticise the merger will be foolish. Also, the buy was financed by a large number of banks (leveraged buyout). So they also seem to think that this merger will produce good results. Time will whether it was a wise decision or not.
The merger being thought of as an "Indian Takeover" is just a propoganda.
QUOTE(1pakistani @ Mar 2 2007, 07:18 AM) [snapback]870742[/snapback]
Let me point out one thing to u and all ur other indian friends.
WHen u get loan and buy out somthing u dont go around calling ur self superpower since what uve bought is on loan and when the banks asks for their money u will have to pay it back to them, u defult there goes ur credit rating and ur steel mills on autions. SO if u say indian companies spend $10billion u guys are plane wrong. There is difference between EQUITY and LOANS. Beside TATA paid heafty amount to get these firms but they wont provide much.
Now on second part. FOR TATA to run CORUS it has to offering pay according to european standards not Indian. So it will have to Pay at least $30,000+ to each worker and the safety measure are strong enough to make TATA worried. Now how will TATA be able to manage such firms in west when it is used to the condition at home. Now if u are suggestion TATA will shut down CORUS and than it will gain excess to european market than mate it would be the most dumbest decision eva made. Now TATA might be able to run these firms but it will also have to keeps its interest in the basket. B4 CORUS was competator so TATA was able to compete with lower prices now its not the case. I think this time TATA has bought somthing that is way too heavy for it to carry. Ill be interest to see how this turns out to be.
A wise decision would have been to build more plants at home and challange directly the market share of CORUS...
Einstein, many of the takeovers in the world are financed by banks...
Infact no one will buy with cash.... they will either acquire by shares / or by fanancing by banks...
Banks wont finance every deal...
Banks financed this deal, bcoz their analysis & research showed tht the takeover is profitable.
QUOTE(starshine @ Mar 5 2007, 09:16 AM) [snapback]872294[/snapback]
Einstein, many of the takeovers in the world are financed by banks...
If you can read English, try to understand what article says.
QUOTE(MirBadshah @ Mar 5 2007, 01:21 PM) [snapback]872400[/snapback]
If you can read English, try to understand what article says.
well, I hv read it & my post is not for wht article says.
My post is a reply for ur post which says acquisision by loan is one useless , u were talking asif anybody can acquire compaines by taking loans :)
May be Tata should open some postions for CEOs and hire the talented people from here. People here have some great insights and brain power. All the higher up Brahamines that they have in their positions are dumping the company and creating poverty for Shudras. Better still might be Pakistan government should hire these as PR managers and technology consultants as they can give some great spin on anything and advise in great detail about what is profitable and what is not. I see great potential here.
QUOTE(yakeepi @ Mar 1 2007, 09:03 PM) [snapback]870563[/snapback]
LOL, this is why I said I don't understand Indian mentality and that sounds soooo unrealistic.
1.
Europe market(plus US and Canada) have been steadily shrinking for quite long already. The biggest market is China today, even India itself looks more promising. For $10 billion something I will definitely choose to build a new one in India.
2
Commercial steel making has very little secret today, you just need to buy the cutting edge equipment which are available in the market freely, as long as you have the money, Why don't buy equipments and build in India? South Korea didn't have any steel mill 30 years ago, now they have a cutting edge steel industry since they have the capital, it's just that simple.
And, you can't just transfer the technology to India and close the factory. You need to transfer the whole factory to India as I said equipments are more important. That's why China has been buying the 2nd-hand steel-making equipments in the west all the time and sending them back - most of them are from bankrupted western steel mills and sold as the waste steel.
Seems you don't understand European labor law and commercial rules there - you can't just close the mill and go home - the union will sue you and the government will fine you. It's not that easy to rid them off.
Its heartening to see that u hv become big financial expert than Ratan Tata & his IIM grad colleagues...:)
Luckily , he did nt hire....
Boss, Steel industry is about consolidations now.... buy or bought ...thats the theme...
Where do u think Arceler + Mittal Steel will sell their steel ?? if there is no market other than India & china ???
There is still lot of market for steel, but its not growing in EU & US.... So consolidations are needed to keep the profitability..
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