Compare Tata Steel’s margins at 40%, by far the highest in the global steel industry, with that of Corus at 10%, way below the industry average of 18%. “Corus is less than competitive as of now and our endeavour would be to make it more competitive,” said Tata Steel managing director B Muthuraman. The company is looking at a consolidated EBITDA of 25% over the next five years provided all other plans take off as per schedule. So how does the company propose to do it? “There will be no change in the existing management structure of Corus. We will be setting up task forces and executive committees to integrate the two companies,” says Muthuraman. The objective will be to improve operational practices by benchmarking. Economies of scale will improve purchasing power. Combined strength will offer better pricing opportunities. Shared services will reduce cost of operations and Corus’s R&D strengths will allow Tata Steel to beef up its domestic operations. Once this is through, say roughly three years, the synergies are expected to add about $300-350 million a year to the company’s profitability, said Muthuraman. Will this mean trimming manpower? Muthuraman responds rather diplomatically. “The best safeguard against jobs is to make an industry competitive. Tata Steel will make Corus competitive.”

“The Tatas have done their homework in studying the value proposition. There is no reason to believe that it is a hasty decision,” says Devendra Singhal, an analyst with stock broking firm Religare.

The most challenging task is the integration the human resource assets of the two. Agrees Ratan Tata, “Nothing is more disruptive than having conflicting cultures.” The group has an advantage here. The Tata Tetley deal and Tata Steel’s acquisition of NatSteel and Tata Motors Daewoo deal are just some cases in point. The Tata group has successfully integrated different nationalities and work systems to develop a seamless culture relevant to them. So keep your fingers crossed for the two to sing in chorus!