 "Brexit to delay sale process of Tata Steel's UK unit")
It might not be all that tougher for Tata Steel, the country’s largest in this segment, to sell its UK division after that country’s vote to leave the European Union.
With Britain’s exit, the sale process of this loss-making division is likely to be delayed, “as no buyer would like to invest in an environment where there is high risk in the global system. That will be the pain point. Renegotiation will also happen, as the currency will now depreciate but, in whatever case, the deal can still go through,” said Giriraj Daga, portfolio manager, SKS Capital and Research.
In March, Tata Steel announced a plan to sell the entire 10.6-million tonne unit. Of this, it recently managed a buyer for its 4.5 mt long products division.
With the Brexit news, the stock price of Tata Steel fell nine per cent on the BSE.
“Since the currency will depreciate, imports will slow down and this will help steel producers in the UK region. This would be a positive for Tata’s UK unit as well,” said an analyst with a local brokerage.
Calls to Tata Steel went unanswered. The company last month said it had deferred a decision on the sale process until July.
“I think the sales process was slowed down at the request of the British government until the result of the referendum,” Harish Patel, national officer (metals and foundary) at Unite, the main labour union involved, told this newspaper. “It will now be known soon, perhaps on Monday, of where the sales process is going.”
Unite is Britain’s biggest trade union. The 11,000 workers active at Tata Steel UK’s operations are its members.
With the Brexit development, the division’s British Pension Scheme is also likely to undergo a change, “sadly, for the worse”, Patel added.
Early this month, there was news that Tata Steel was said to be close to striking a deal with the UK government to retain the operations there. In reaction, the unions had expressed concern that this was the company’s roundabout way to abdicate its responsibility on the Pension Scheme, a heavy liability for it.
With Britain’s exit, the sale process of this loss-making division is likely to be delayed, “as no buyer would like to invest in an environment where there is high risk in the global system. That will be the pain point. Renegotiation will also happen, as the currency will now depreciate but, in whatever case, the deal can still go through,” said Giriraj Daga, portfolio manager, SKS Capital and Research.
In March, Tata Steel announced a plan to sell the entire 10.6-million tonne unit. Of this, it recently managed a buyer for its 4.5 mt long products division.
With the Brexit news, the stock price of Tata Steel fell nine per cent on the BSE.
“Since the currency will depreciate, imports will slow down and this will help steel producers in the UK region. This would be a positive for Tata’s UK unit as well,” said an analyst with a local brokerage.
Calls to Tata Steel went unanswered. The company last month said it had deferred a decision on the sale process until July.
“I think the sales process was slowed down at the request of the British government until the result of the referendum,” Harish Patel, national officer (metals and foundary) at Unite, the main labour union involved, told this newspaper. “It will now be known soon, perhaps on Monday, of where the sales process is going.”
Unite is Britain’s biggest trade union. The 11,000 workers active at Tata Steel UK’s operations are its members.
With the Brexit development, the division’s British Pension Scheme is also likely to undergo a change, “sadly, for the worse”, Patel added.
Early this month, there was news that Tata Steel was said to be close to striking a deal with the UK government to retain the operations there. In reaction, the unions had expressed concern that this was the company’s roundabout way to abdicate its responsibility on the Pension Scheme, a heavy liability for it.