POSCO PROJECT IN JEOPARDY

The 12-million tonne steel project in Orissa to be set up by POSCO was acclaimed as the biggest FDI over two and half years back but it seems to be jinxed. From the beginning, it has been facing roadblocks one after another. There was a furore over the company's reported plan to export high grade iron ores and it died down only after the officials refuted such reports.
The site and infrastructure demanded for setting up of a dedicated port at Paradip also ran into rough weather. But the biggest shock the company got when the landowners of the proposed site refused to part with their land. There was considerable media hype that the project would be a boon for the people of Orissa which is one of the most underdeveloped states in India.It was expected by inveswtors as well as the government that people would just lap it up. Instead, organised resistance groups sprang up to protest against setting up of the project for fear of thousands being displaced from their homes and farmers loosing their farmlands.The resistance soon found sympathisers not only among political parties of all hues but also social activists and environmentalists. If one has been following the news reports on agitation that is going on for months, he or she would conclude that the proposed site has turned into a veritable war-zone. Besides regular violence and injuries to protesters as well as lawkeepers, the situation is getting out of hand as people are arming and training themselves to continue their fight against any forcible acquisition of land. Perhaps, the wind of Nandigram has blown to the neighbouring state.
The last straw on the camel's back came by way of the recommendation given by the Supreme-Court appointed centrally empowered committee saying that POSCO should not be given piecemeal forest clearances. It has urged that only after 'considering the ecologicalimportance of the area, number of trees to be felled, adequacy and effectiveness of the rehabilitation and resettlement plan for the project affected persons and benefits accuing to the states', the clearance should be given.
From the hurdles faced by POSCO, it is quite clear that there there has been too many slips 'twixst the cup and the lip. In their anxiety to win some brownie points, both the state and central government have been going gaga over such projects without first tying up the loose ends. The Chief Minister of Orissa has made a bold statement that work at the project site would commence on 1st April, 2008 coinciding with the state's birth anniversary despite such poor progress made by the project in the last two and half years. The first day of April is also used by pranksters all over the world every year to fool people. Let not POSCO steel project provide fodder for April Fool's Day of the year 2008.

Water: Waste Not, Want Not !

Location of steel plants is generally decided upon the proximity to two most important resources – iron ore and coking coal. Surprisingly, the third one – water which is emerging as critical resource is not always given proper consideration. Water scarcity is flaring up often as a serious crisis in several parts of India despite floods ravaging the country for decades. Industrialization has worsened the situation as power and steel plants spring up which are water guzzlers.
Now that India is poised to emerge as the second largest steel producer in the world attaining 180 million tones of annual production by 2016, the crisis of water is going to aggravate with 3-4 mega projects of 6-12 million tones capacities along with dozen of smaller capacities being put on the anvil.
The states rich in iron ore deposits having wooed investors for new steel projects are in an unenviable position. The case of the state of Jharkhand serves best to exemplify. It was reported that 11 companies including Tata Steel and Jindal Power and Steel Ltd have applied to draw water from Subernarekha which has the flow of 1520 million cubic meter (MCM) water against the demand of 1667 MCM. Officials said that nearly 329 MCM is being drawn from the river for irrigation, 220 MCM for potable water and 150 MCM for industrial use.
Indian steel industry’s water usage is abysmally poor. For producing one tonne of steel, according to CSE, steel companies in India use 10-80 cubic meter water where as US plants use only 5-10 cubic meter water. Moreover, approximately 80-85 per cent fresh water used in steel making in India is discharged as effluent although over 90-95 per cent water used for steel making in USA is recycled.
Steel is necessary for development but water is essential for life. For sustainable development, the steel industry in India would have to learn to conserve water and use new technology to minimize its use just as it struggles to reduce greenhouse gas emissions to fight global warming and protect the environment. India’s quantum jump in steel production from 51 million tones to 180 million tones will call for celebration only when the scarce water resources are judiciously used without triggering social conflicts and causing miseries to millions of common man.
It may be recalled that someone had perhaps rightly warned “The Third World War would most probably be fought over water”. Let not steel industry be the villain of piece!

Politics Invade Steel Projects

There is all round euphoria and optimism pervading the steel ministry. The national steel policy had envisaged a total production of 110 million tonnes by 2020. The ministry had originally envisaged steel production of 65 million tonnes by 2012, which had been revised to 80 million tonnes. Having revised production figures for crude steel production in the financial year 2006-07 and pegging at 50.71 million tonnes and that of finished steel at 51.90 million tonnes thus becoming the 5th largest steel manufacturer in the world, the optimism of Steel ministry understandably continues to soar high. The steel secretary said recently “Based on the current expansion program, that the companies have presented, it is estimated that the capacity of all the companies put together to touch close to 120 million tonnes. Even if they operate at 90% of the installed capacity, the production level will be at 110 million tonnes.”
In industry circles, such projections of capacity expansion are termed differently namely Pessimistic, Optimistic and Realistic. While the Optimistic projection has been given above, the pessimistic projection would be quite uninspiring based on growth attained in the past decades. The growth of steel industry during 2006-07 though very outstanding cannot be taken for granted as normal for the next five years, some cynics may argue.
It is understandable that such optimism is based on what was discussed by the ministry officials with the steel industry captains recently. It is reported that they pledged to create an additional capacity of 70 million tonnes within next five years and "they have gone full throttle to fructify their expansion plans".
Unfortunately, things are not moving always exactly as per the plans drawn up by industry captains and bureaucrats. There is too much politics in the air polluting the industrialisation tempo. The violent resistance in several states to SEZs serves to tell the people who are actually calling the shots. Even the POSCO steel project in Orissa which was showcased as the largest foreign investment in the steel sector has been languishing for nearly two years due to local agitation over land acquisition problems. The inter-ministerial group (IMG), set up by the government to expedite investments in the sector, cannot provide relief to investors whenever politics get precedence over economics.
So whether projections will ultimately turn out to be optimistic, pessimistic or realistic will depend upon politics and going by the present uncertainties and the low level to which it has already plummeted, such optimism may turn out to be misplaced.

And Miles To Go Before ...

India would love to be ranked No.2 globally - be it economic power or steel production or some other criterion. We are already euphoric about emerging as the second strongest economy by the year 2050. This is not daydreaming. The world famous financial analyst Golden Sachs made this forecast after thorough research. But doubts linger in the minds. Already the GDP growth rate for the year 2007-08 has been scaled down to 8.5%. Then, are we going to attain double digit growth rates or the economy will start cooling even before getting heated?
I read in Economic Times that India is set to emerge as the world's second largest steel producer by the year 2016 when the production capacity will rise to 120 million tonnes. The steel secretary is reported to have given this one-liner assurance -"Given a conducive mineral policy framework, this country should be producing 120 million tonnes by 2015-16 and 180 million tonnes by 2019-20". Doubting Thomas es would say it took 16 years after the liberalisation of the steel industry to double the capacity; will it then be possible to treble capacity just within 9 years notwithstanding the acquisition spree of foreign steel companies by domestic producers. The National Steel Policy took years to see the light of the day. The mineral policy framework will emerge only after several ministries and Planning Commission arrive at a consensus. All this will take time. Then one does not know whether the policy will really be 'conducive' to the steel industry or not. Some of the mega projects for which MOUs were signed with lot of fanfare have not made much progress. Posco project in Orissa is still dragging its feet over land acquisition and independent port facilities at Paradip. The JSW project in West Bengal is facing resistance over land acquisition.
The serious delay in execution of power projects (which are the most important ones for building the infrastructure) and the recent alarming news of severe power cuts in the industrial hub Mumbai affecting production show the failure of the government to implement projects in time. During the Tenth Plan, power sector could achieve just 56% of capacity addition against target. The Working Group on power has already warned of serious fund shortage to the tune of Rs450, 000 crores ($100 billion) during 2007-12 which is nearly 45% of the total funds needed for power projects during the period.
With such pathetic performance of the government in the past, the optimism aired by officials should be taken with a pinch of salt. We should not get too excited about such scenarios as we have learnt from past experiences that there's many a slip 'twixt the cup and the lip. Some may consider me as a pessimist for expressing such doubts. I would be happy if I am proved wrong.

Wedding Bells Ringing For Corus

It is billed as a mega event - it is the wedding of Corus. It is also something unprecedented. The wedding is not going to be over in just a few hours. It will start by 10pm Indian Standard Time on 30th January, 2007 and depending upon what transpires, it may continue up to 8-30am on 1st ebruary, 2007. Interestingly, the groom has not been fixed as yet and there are two suitors.
Yes, I am referring to the acquisition drama of the steel giant Corus for which initially the only suitor was Tatas. But CSN of Brazil came out of the blue and demanded the hands of Corus. I was very thrilled at the prospect of Tata-Corus acquisition as it would have been the biggest by any Indian company for about $9 billion and made it the fifth largest steel manufacturer in the world. Though the earlier acquisition by Mittal Steels of Arcelor (which turned out to be a long-drawn corporate tug-of-war) ended making the combine the biggest steel company in the world, it was, in any case, launched from the foreign soils unlike the acquisition bid by Tatas - the oldest steel manufacturer and the biggest in the private sector in India.
There are contradictory press reports emanating from London about who will win the hands of Corus. 'Daily Telegraph' has said "CSN has the great desire to win Corus and may go as far as 600 pence." The Sunday Times quoted sources saying :"Do not write off Tata yet ...they are serious and they believe they can win." The irony lies in the highest bidder getting Corus despite a general impression prevailing that Tatas and Corus want each other.
In my post 'The eternal triangle of Corus-Tata-CSN', I had already said that I would be happy to see Tatas emerge as winner. I had, at the same time, expressed my misgivings about the drama ending like the film Devdas in which the hero (read Tatas) ruins himself without trying to save Paro (read Corus). Barely 30 hours are remaining for the curtains to come down. The suspense is building up. But then, I am keeping cool being reminded of the wise saying: "By all means get married. If you get a good wife, you will live happily ever after. If you do not, you will become a philosopher."
I do not want Tatas to become a philosopher.

Moribund Ministries Flushed With Funds

Every year, come January, ministries go overdrive with their unfinished projects and unspent allocated funds. That is because the allocations are for the 12-month period April-March and first 9 months usually pass in warming up and frenetic activity is seen during the last quarter of the financial year (January-March). Reports usually appear about unspent funds in January and then the war cry is given.
One such report in Times of India 'Ministries sitting in funds, may loose unspent chunk' is an eye-opener. The worst ranking ministries are civil aviation 1%( Rs130 crores or $30 million), steel 16% ( Rs45 crores or $10 million), Non-conventional energy 18%( Rs597 crores or $130 million) and tourism 27%( Rs830 crores or $180 million) besides others who have not spent even 40% of allocated funds. So the usual excuse of funds shortage cannot be forked out for miserable progress of these ministries. It is the lethargy and inefficiency of the concerned ministries which is responsible for such a deplorable state of affairs despite a separate Expenditure ministry being there for monitoring expenditures.
I find the non-performance of the ministry of non-conventional energy, tourism and steel particularly very disappointing. India is heavily dependent upon imports for its oil needs and exploiting non-conventional energy can mitigate to some extent its energy crisis. Poor performance in such crucial areas is therefore alarming and unpardonable. So is the case with the steel ministry as growth of steel industry holds the key to removing infrastructural weakness. In case of tourism which has got such a huge potential, opportunities are being frittered away while other competing nations benefit out of our inaction.
Why cannot the concerned officials be held responsible for their callousness and inefficiency? The slogan should be 'Perform or perish' and anyone failing including ministers should be shown the door.
What do you say?

Indian Steel Industry Gasping For Real Autonomy

For the steel industry, the New Year 2007 has brought a mixed bag of news. The good news - International Iron and steel Institute has informed that the global steel production during the year 2006 has been 1.21 billion tonnes registering a robust growth of 9.4% over the previous year. The other good news is that China continues to dominate as the largest steel manufacturer in the world with a production of 421.33 million tonnes and growth of 19.4%. Such growths globally and in individual nations including India is indicative of good demand for steel. It is expected that the market during the year 2007 will have a growth of 10% and thus give the industry some breather.
The bad news is for the Indian steel industry. Demonstrating a typical bureaucratic mindset, the government is reportedly contemplating to regulate steel prices for which a high level committee to monitor price movement has already started working. The industry which was languishing due to governmental controls were freed from the shackles only in 1991. There has been a surge for setting up new steel projects both by Indian investors and foreign giants like Posco and Arcelor-Mittal. This is in line with the National Steel Policy which has fixed a target of 110 million tonnes by 2019-20. But the present government's move to backtrack and reintroduce price control is going to affect the rapid growth of the steel industry which is the need of the hour for India's infrastructure development.
For reasons best known to the government, it has been flexing its muscles from time to time for imposing price controls. India and china both produced measly 2 million tonnes in 1950s. Today China produces the 421 million tonnes ten times the steel produced by India. It is the policy vacillations and lack of political will that have stifled India's steel industry. Remember in what pitiable state our civil aviation industry was before competition was permitted? Today airlines which offer minimum fare of rupees nine have turned corners in just 3 years.
Such are the dramatic changes that take place whenever governmental interference is withdrawn. But packing up existing authority and bringing new order is a far cry. If such stumbling blocks remain, India's steel production may not attain its target and it could slide down further from present level of a mere 10% of China's production. I just cannot accept such a pitiable scenario.

No Chorus Of Approval For Corus Acquisition

The climax of the drama for acquisition of Corus is about to be enacted shortly and ironically there appears to be no chorus of approval. I had concluded my post 'The Eternal Triangle - Corus-Tata-CSN' with "What Tatas will do to win the hands of Corus? I will be happy to see Tatas a winner. Let not the acquisition drama end like the film Devdas where the hero ruins himself instead of trying to save Paro". The vey same premonition has started haunting me.
The Brazilian giant CSN initially had made an offer of 475 pence per share against Tata's offer of 455 pence per share just only to provoke Tatas to revise their offer upwards to 500 pence which was stymied within hours by its 15% hike to 515 pence. In absolute terms, Tata's offer stands at $9.1 billion as against $9.6 billion of CSN. Clearly, the eternal triangle is inviting economical trouble.
Some analysts are of the view that Tata's offer is expensive whereas others feel that this is a golden opportunity for them to emerge as the world's fifth largest steel manufacturer. A report extracted from Economic Times puts the different perspectives succinctly. "ET spoke to 11 top investment bankers, of which five said the bid was now expensive and the Tatas could do well to consolidate their presence in India, one of the largest steel markets in the world, rather than paying dearly for a foreign steel mill. But another half among the deal-makers who were polled, believes that though painful in the short term, it is the larger picture that is still attractive - of a Tata Steel that is the fifth largest in the world, of a company that is able to influence in raw material negotiations and finally, of a company that did not let go of an opportunity to buy a world class firm."
I am sure Tata has the right corporate wisdom devoid of any personal ego and backed by experts' opinion to continue the bidding war avoiding quicksand that may lie ahead. We will have to wait till the curtain comes down.

The Eternal Triangle Of Corus - Tatas - CSN

When Tatas successfully bid for the acquisition of the Anlo-Dutch behemoth Corus, it was an euphoric moment for me as the Indian corporate giant appeared to be emerging as an Indian MNC to take on the world champions of industry. I also found it somewhat ironical that because of the globalisation, Tatas were set to become for U.K. in 21st century what was East India Company when it had entered India in 18th century. The acquisition was very keenly watched as it was slated to be the largest Indian acquisition of any foreign company worth $8.1 billion that could push the rank of the new combine Tata-Corus to become the fifth largest steel manufacturer in the world.
So far, everything seemed to proceed on the expected lines and we were all thrilled to see the beaming smiles of the top Tata officials in TV and print media. The Corus board had also approved the offer of 455 pence a share made by Tatas though a third party could still throw a spanner in the works till the EGM of shareholders put the final seal on it. The acquisition drama would have lost its excitement had not CSN - a Brazilian steel manufacturer announced its plan to bid 475 pence a share raising the buyout price to $8.3 billion. The new suitor CSN's entry can be likened to the usual Bollywood stuff where the hero who is deeply in love with the heroine suddenly faces the risk of loosing her as someone villainously tries to snatch her.
Getting down to brass tacks, CSN has not only made a higher offer, albeit informally so far, it has the advantage of owning iron ore mines and have been exporting 30 million tonnes annually which is likely to go up to 50 million tonnes by 2010. Owning iron ore mines by steel manufacturers is winning half the battle in competition. It is because of such advantages that Tatas are credited with making the cheapest steel in the world. In case of Tata-Corus combine, Tatas would be able to supply slabs only to Corus who would have to alter their existing manufacturing process. CSN's steel manufacturing capacity is higher than Tata's and had made 5.8 million tonnes during the year 2005.
The bidding war has just started and the share price of Corus has already crossed 500 pence a share. In the changed situation, Tatas will have to revise their offer to clinch the deal. I am sure Tatas will not throw in the towel so early. Though Tatas are viewed as a role model in the corporate world, they seem to have a weakness. When it comes to showing its nerves of steel in forays in new locations, it has disappointed its admirers and its image has taken a beating in the past as in Gopalpur and Bangladesh.
What Tatas will do to win the hands of Corus? I will be happy to see Tatas a winner. Let not the acquisition drama end like the film Devdas where the hero ruins himself instead of trying to save Paro.

Untangling Issues From China

When I wrote my last post titled 'China - The Unchallenged Victor', little did I know that my next post would also be on China and that too, so soon. That is because I am not a sinologist. But going through the newspapers in the morning today, I found serious contradictions in a few news items which forced my thoughts to culminate in this post.
Politicians are well-known for backtracking on their statements they make once any controversy arises. They usually take refuge under a refrain 'I have been misquoted'. But what surprised me was the latest example of contradictions being made in the same breath by the ebullient Steel Minister, Ram Vilas Paswan. He said "The government should frame proper policies on the entry of Chinese companies in India". Interestingly, the above plea was made as Indian steel companies are apparently apprehensive that allowing Chinese companies with their ability to make cheap steel may threaten their existence. Instead of India trying to be competitive cost and quality wise, the honourable Minister is trying to stop steel companies from China entering India and that too when we are swearing by globalisation mantra. The contradiction did not end there as he went on to say "SAIL should look for acquisitions, like Tata Group's acquisition of Corus".
The startling comments on another issue coming from the other extreme of the political spectrum are quoted from a news item titled 'CPM's fixation with China continues' appearing in Economic Times. "These are historical issues. These are disputes. That's why issues are being discussed", Mr Yechury told reporters. He even suggested a resolution to the dispute: don't transfer populated areas on either side. In other words, Mr Yechury does not think that the Indian government is correct when it says that the whole of Arunachal Pradesh belongs to India.
So we have a Steel Minister and Indian steel industry scared of competition from China and yet are interested in spreading wings as part of globalisation opportunities. Then we have a national party CPM - part of the present UPA government who are flexing their muscles after improving their number of seats in Lok Sabha that does not support the Indian government's stand that the whole of Arunachal Pradesh is part of India.
I am really flabbergasted at the political fare spread before us. What should I choose and what should I reject?

China - The Unchallenged Victor

Today, China is the cynosure of the whole world being the fastest growing economy. The enviable position was attained by attracting $72.4 billion foreign direct investment (FDI) during 2005 which is one fifth of all FDIs bagged by developing economies. It has also assiduously built a foreign exchange reserve of $1 trillion. It produces and consumes one third of the world steel so much so that the entire world steel industry seems virtually to be at its beck and call. There are plenty of other examples to showcase its invincible position for China to say deservedly to the world - "I am the monarch of all I survey".
India, too, has been hogging limelight for its spectacular GDP growth rate in excess of 8% for the last three years. Though next only to China in matters of recent rapid economic progress, India remains way behind. Being part of the same race, comparisons between the achievements of two nations are often made. The two most populous nations of the world are vast and part of Asia. Perhaps the commonality ends there. The social, political, cultural and linguistic differences between them are too significant.
Yet, I find a common tendency among analysts and some determined bloggers to compare and contrast the two on any issue. We must remember that India is the biggest democracy in the world and embraced liberalisation in 1991 after much dithering. Even today, the Left parties continue to throw a spanner at times in the government's policies whenever they consider it politically expedient to do so. It is a different matter that their counter-parts in China are giving smooth passage to inviting FDIs without any let or hindrance. And whereas any development work can be delayed or stalled in India by a small group of disgruntled citizens or vested interest, there is virtually one-party rule in China.
With both the two big nations trying to attain supremacy, there can never be total cooperation and trust among them though a lot is being expected out of the ensuing visit of the Chinese President to India. While bilateral trade is expected to cross $50 billion by 2010, there are some disturbing news that China will join hands with Pakistan to claim Siachen - a strategic military location for India. There was a war over border disputes in 1962 just before "Hindi-Chini bhai bhai" slogan became immensely popular with the Indians.
The future path, therefore, ought to be traversed with caution exercising wisdom gained out of past mistakes.The bureaucracy and the political mindset seem transfixed at China. It must be realised that India started the reforms process 15 years after China had started besides having constraints in framing and implementing policies unlike China. I read an editorial in Times of India that India is trying to put a man on the moon simply because China is also gearing for the same feat. Stretching competition to such extents can be self-defeating.
Let us work determinedly even if our pace is slow reminding ourselves of the saying "Slow and steady wins the race". More importantly, India must retain its own identity and refrain from playing second fiddle to China.

Tata Steel Steals The Show By Proposing To Corus

I told you in my last post titled 'Acquisition - The Stepping-Stone To The Path Of Success' how acquisitions are becoming commonplace in business. I also mentioned about this particular deal - Tata Steel taking over Corus likely to materialise shortly. Now it is very much official. The ball has been set rolling by Tata Steel - the first steel company and the biggest in the private sector in India; they have made an offer of 455 pence (Rs 385 approximately) for each share of Corus and if it goes through, it will be the third biggest acquisition in the steel industry. Of course, the mother of all acquisitions remains Mittal-Arcelor's at an investment of $43.63 billion followed by Kawasaki's takeover of KK Corp at $11.89 billion.
After the takeover, Tata Steel-Corus combine will have steel production capacity of 23 million tonnes. Presently, Corus is ranked 8th and Tata Steel 55th in global steel capacity. The deal is most likely to go through even as Corus has been courted by other suitors. Tata Steel has the advantage of producing the cheapest steel in the world by having captive mines and its cost is not subject to the vagaries of price fluctuations of raw materials. Corus has a steady market in Europe for its high-valued products having applications in construction, automobile and aerospace industry.
I think the acquisition will send out a message loudly to the world that Indian companies are having the right stuff to become multi-national companies (MNCs). But to call spade a spade, the steel in the raw form will be made in India with all the attendant problems of polluting the environment while the finishing operations will be done in Europe; it will put Indian MNCs at the bottom of the list.
In any case, you cannot have the cake and eat it too!

To Export Or Not To Export Iron Ore

For India racing to become a super economic power, fast expansion of steel manufacturing capacity has become an urgent necessity. The National steel Policy aims at a production capacity of 100 million tonnes by 2019-20 but some estimate it to reach 150 million tonnes the way new steel projects including those of the international giants like Arcelor-Mittal and Posco are springing up. Simple arithmetic puts the iron ore requirement at 240 million tonnes per annum. The estimated iron ore reserve in India is around 13 billion tonnes.
Another study puts only 6.311 billion tonnes are proven reserves and a balance 17.27 billion tonnes are probable and possible reserves. Exports from India have quietly risen to 90 million tonnes per annum. Some are apprehensive that iron ores may not last even for 30 years. One would be inclined to infer from the above that iron ore exports should be stopped. An expert 'Hoda committee' has poured oil over the flames by suggesting that export of iron ores should continue.
There are two schools of thoughts prevailing on the issue.On the face of it, exporting scarce raw materials without value addition does not make much sense. The Steel Ministry supporting the interest of the steel manufacturers wants the exports to be phased out in next 15 years. It has now got a political backing with CM, West Bengal openly criticising the export of iron ore.On the other side of the battle-lines are Mining and Commerce ministry officials. This tug-of-war will finally determine the future of Steel industry in India. Associated Chambers of Commerce and Industry of India (ASSOCHAM) released a paper recently titled "Indian iron ore: Where are we heading".
Anyone willing to hazard a guess?

Posco Bitten By M & A Bug?

Whether it is the survival instinct or the ambition to climb higher, Posco - the South Korean giant and fifth largest steel manufacturer in the world is looking for acquisition opportunities in Asia. The move appears to have been triggered by the threat perception of the company itself becoming target for acquisition by bigger sharks like Arcelor-Mittal Steel which has emerged as the largest manufacturer with a capacity of 110 million tonnes. The corporate battle for merger of Arcelor the second largest steel manufacturer with Mittal Steels which was already in the top position was closely watched that lasted several months and created history of sorts. This classic M&A sent shock waves throughout the steel industry worldwide. Several leading manufacturers in China and even Tatas in India have already changed their holding pattern to pre-empt any hostile take-over bid.
Posco, on the other hand, appears more vulnerable at present as more than 60% of investors of the company are foreigners. Their strategy seems to bring change in ownership pattern by mergers and acquisitions. They are on the lookout for some companies in China and India. Fortunately for Posco, such plans can be translated to reality as they are cash-rich with an estimated $1.57 billion in reserve.They have already made a foray in India with a greenfield project to manufacture 12 million tonnes steel at an investment of $10 billion. As ill luck would have it, the project is hanging in the balance as land acquisition has not proceeded smoothly. The company has, however, embarked upon cross-holding ties with Japan's Nippion Steel Corp so that it does not become an easy prey to hostile take-over bids.
Let's see which way the wind is blowing.