Consider the facts: Tata’s winning offer at 608 pence a share works out to nine times Corus’s EBITDA based on its earnings for the year ended September 30, 2006. This is much higher than the massive $38-billion-plus offer Mittal Steel made to acquire Arcelor, which worked out to six times Arcelor’s earnings. Too expensive, some may say. But Ratan Tata and his team of managers feel there’s enough and more in Corus in the medium-to-long-term to justify the payout. The stock market has expectedly given a thumbs down to the deal, and rating agencies are keeping a close watch on the Tata Steel stock. However, viewed dispassionately, there’s a lot more to the Tata-Corus deal than just valuations.

It’s about attitude. About a longer-term view, and staying power. Something, even the group’s harshest critics will agree, Tata has shown in ample measure, in particular over the past five or six years. Indeed, there were times when it seemed the cracks were getting too big to fill up, the problems too cumbersome for Tata managers to work out solutions for. A massive first half-loss for Tata Motors in the early part of the millennium, serious criticism of Ratan Tata’s dream project, the Indica, and the mess at Tata Finance, all had analysts questioning the group’s strategy and, in some cases, leadership. Today, the story has changed. And quite dramatically so. Tata Motors is back on track, Tata Tea is on an acquisitions-and-growth spree, and Tata Steel’s just bought Corus. In fact, over the past few years, a series of acquisitions have marked the Tata group’s strategy of becoming global players in many of its businesses. Whether it is Tata Steel’s earlier buyouts of Millennium Steel, Thailand, or Nat-Steel in Singa pore, Tata Tea’s bold acquisition of Energy Brands in the US for $677 million, Tata Coffee’s buyout of Eight O’Clock Coffee for $220 million, Tata Motors’ purchase of Daewoo Commer cial Vehicle Comp any, Korea, or even Indian Hotels’ acquisition of Ritz Carlton Hotel, US, for $170 million, what started as a one-time big acquisition with Tata Tea’s purchase of Tetley, UK ($407 million), in February 2000, has now turned into a steady stream of overseas buyouts by the group.

Yes, it’s great news for India Inc. A reflection of a new-found confidence and aggression by Indian companies. The Tata group has shrugged aside short-term concerns on valuations and debt burdens in favour of what many are calling a huge leap towards globalisation. Bankers agree it also signals a coming of age in funding India Inc’s global ambitions.

There will be enough companies emboldened by the Tata example, who will want to fuel expansion plans by way of inorganic growth overseas. But herein lurks a danger

Clearly, there will be enough companies that will be emboldened by the Tata example, who will now want to fuel their expansion plans by way of inorganic growth overseas. Already, India Inc has seen quite a few examples of this from other groups, and there will be many more now. But herein lurks a danger. Banks run the risk of being drawn into a ‘deal fever’ and, hence, need to be cautious in choosing the acquisitions they intend to fund. While the Tata group has shown the credentials, financial strength and track record of carrying through major acquisitions and making them work, other Indian companies without the size or track record will need to be far more cautious in how they approach global M&As. The issues of integration, management styles and coping with new markets must be weighed very carefully.

To that extent, the Tata-Corus deal is a much more significant benchmark than we can imagine.