Tata Steel's long term profitability to improve: Nimesh Kampani

Our Corporate Bureau
31 January 2007

Commenting on the deal, Nimesh Kampani, chairman, Morgan Stanley says that the long term profitability of Tata Steel will improve. He feels that a bit of equity financing will help Tata Steel. According to him, short-term investors may be concerned, however long term investors will remain positive.

CNBC-TV18 shares with domain-b its exclusive interview with Kampani:

How are you feeling after this acquisition?
I am happy for Ratan Tata and the complete management team of Tata Steel. They have made India proud, although in this competition, they had to pay a high price; but I think it may be worth it.

The Tata Group has substantial financial strength and there was backing of Tata Sons. So I am sure with innovative financing strategy, the Tata's have always done it and they will consolidate Tata Steel. With the consolidation of Corus' balance sheet with Tata Steel, in the long-term, the profitability of Tata Steel will go up.

It was a huge bet and there will some equity financing over a period of time that Tata Group will do. India will be proud that Tata Steel will now be in one of the five major steel companies in the world.

Will equity finance be the option that Tata Steel management will have to look at? What could be the instrument they might look at — overseas listing or in the domestic market?
There are all the options because Tata Steel has already passed the resolution from the shareholders to raise money either in the GDR market or ADR market or domestic financing.