Tata Steel still in talks over UK pension

It is planning a one-time settlement of $663 mn to its UK pensioners

Debt-laden Tata Steel is still in talks with the UK pension protection fund (PPF) over the pension of its employees at the UK operations.

The board of Tata Steel is scheduled to meet tomorrow (Thursday) to discuss fund-raising for the company. 

According to media reports, Tata Steel is planning a one-time settlement of $663 million to its UK pensioners under a new scheme called the Regulated Appointment Arrangement. 

“There is absolutely no change in status with regard to negotiations between Tata Steel and the PPF. But, we expect a solution by July-August,” a trade union source said. 

“The settlement is part of the guarantee document prepared in 2014 and there is no update to it till date,” the source clarified.

Reacting to the payout news, brokerages on Wednesday placed a buy call on Tata Steel’s shares.

“We think Tata Steel will use the funds to expand its India operations, mainly the Kalinganagar second phase to 6 million tonnes per annum (mtpa) from 3 mtpa. The capital expenditure for Kalinganagar-phase I was $4 billion (capex for the second phase is expected to be lower),” brokerages said.

Tata Steel Chief Executive Officer T V Narendran did not comment on the issue.

As of December 31, Tata Steel’s consolidated net debt stood at Rs 75,000 crore. 

The pension issue is being looked at as a major hurdle in resolving the UK operations. Any positive development would augur well for its European operations.