INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

MITTAL EFFECT? TATA SONS TO UP STAKE IN TATA STEEL

THE TATA group will increase its stake in Tata Steel by about 7%, through a preferential issue of shares, to ward off possible hostile takeover, chairman Ratan Tata said on Wednesday. “The steel industry is highly fragmented and considerably vulnerable. The only safeguard is to increase the founding family's stake over time,” Mr Tata told shareholders of Tata Steel.

The Tata group's holding in Tata Steel, now at about 27.48%, will rise to about 33.6% by the end of the current financial year, said Mr Tata. “Given the right price, investors have a right and privilege to sell their stakes in the company. The increase in stake is to ensure that management control remains with the promoters,” he said.

Mr Tata's statement comes just days after global giant Mittal Steel clinched a deal to acquire Arcelor, ending a bitter six-month takeover battle. Mittal Steel has expressed its desire to acquire companies in China and India .