When Tata Steel paid out a hefty $13.1 billion to acquire Corus in 2007, Chairman Ratan Tata described it as a defining moment for the company. It is not hard to see why he thought this may be so.


It made Tata Steels capacity grow three times, put the company on the global map, and spread the risks of the business of making steel. The investment was made in a climate when there was a tremendous buzz about outward foreign direct investment (FDI), a time when a clutch of Indian industrialists were persuaded to see value in making foreign investments at extremely heady prices, which were sought to be justified on the basis of over-optimistic profit projections and growth forecasts for the world economy.


In hindsight, it is apparent that the acquisition was a bad strategic decision, but it would have been difficult, if not well nigh impossible, to predict such things as the Eurozones slide into recession and the abrupt and unexpected slowdown in China. The damage was compounded by cheap Chinese steel flooding western markets.  Read more