 "Sanjeev Gupta")
Liberty House Group has signed a letter of intent for Tata Steel’s loss-making speciality steel unit. Executive Chairman Sanjeev Gupta talks about benefits of his group’s acquisition and the expansion plans at the plant. In a telephonic interview, Gupta tells Aditi Divekar that steel recycling business is still a profit-making venture. Edited excerpts:
What potential are you seeing in Tata Steel's loss-making speciality steel unit, which has been in a challenging business climate for a while now?
The asset has electric arc furnaces that can be switched on promptly. We are currently importing semis at our existing plants. Making steel from locally available steel scrap will bring down our cost of production considerably. Besides, at this unit, we plan to add some downstream products which will augment the current production. We will be investing more in this asset.
How do you plan to fund the Tata Steel acquisition and how much do you plan to invest in the expansion of the unit?
At this juncture, I cannot reveal funding plans for this asset. But Liberty House funds all its businesses through internal accruals earned from retained profits. So we have already arranged funds for this acquisition. As far as the quantum of investment for expansion goes, we will decide as time progresses.
How do you plan to address the pension issue of 1,700 workers and by when will the deal go through?
We are not taking any liabilities on us, we will only be buying the asset. Even if there is any debt on the 1.3-million-tonne unit, it remains with Tata Steel. The deal should go through by mid-January.
What makes you invest in a geography like the UK, which has seen its steel industry go on a declining trend and with Brexit being the recent development that will change trade equations?
It is a common mistake to classify steel as one industry. It is not one industry. Our business model is making steel using domestic scrap, domestic energy, and this recycling business model is viable and does not get affected by cycles. Mini-mills, which recycle global scrap, is a different part of the steel industry. Recycling businesses across the globe are few and all are profitable.
