 "Tata steelworks Port Talbot, Wales")
Debt-laden Tata Steel, this country’s largest in the sector, has indicated to UK trade unions that until the pension scheme issue there gets sorted, the company will not include the UK operations for sale discussion with Germany-based ThyssenKrupp.
“The company has hinted (at this but) not clearly mentioned anything to us,” said a source. “We are looking to get meeting dates with Tata Steel but somehow that is just not happening.”
Koushik Chatterjee, executive director, was not reachable as he is out of India.
In March, Tata Steel announced its plan to sell the entire UK operations, as it had been continously draining company’s financials. Though the company did manage to get rid of the loss-making long products division for a nominal amount to Greybull Capital, the balance 5.5 million tonnes (at Port Talbot and Rotterdam) continue to be with the company, with its pension liability being the biggest hurdle.
“Neither the UK government nor Tata Steel have had a clear discussion with us (unions) on what they plan to do if the pension issue does not get sorted for the next few months. Will the talks for consolidation be stalled? We have no idea,” said the source.
The UK government’s plan to save Tata's business there with pension reforms has been shelved, said the union source. “However, there is no formal announcement from the government,” he added. — ADITI DIVEKAR & AGENCIES, Mumbai
Quoting industry figures, a Financial Times report on Tuesday had said a government plan to save Tata Steel’s UK business by changing the pensions law had been halted. Due to the failure to resolve the pensions issue — the £15bn British Steel scheme is in deficit — Tata’s talks with Germany-based ThyssenKrupp over a potential tie-up of their European steel operations could get complicated, it said.
To facilitate a deal or even persuade Tata to keep the business, ministers wanted to detach it from the company and make it financially self-sufficient. But, nearly three months after a public consultation closed, the proposal is now in effect off the table, according to three people briefed on the matter, reported Financial Times.
The plan is said to have been dropped for several reasons, such as Sajid Javid, former business secretary, being moved to a different ministerial post, new ThyssenKrupp proposals having emerged and ministers fearing the plan might be blocked in the legislature.
Meanwhile, Tata Steel has shortlisted two bidders for divestment of its speciality steel business and the pipe mills in Hartlepool. It is expected to decide by month-end, added the union source.
In the quarter ended June, consolidated net loss widened about 10 times to Rs 3,183 crore as against a Rs 317-crore loss in the corresponding period last year, mainly on account of divestment of its long steel products division in the UK.
The management at its post earnings conference held here mentioned that success of its talks with ThyssenKrupp depended on several factors, including pensions. And, that it continues to explore options for a strategic collaboration through a potential joint venture for its UK business. “We cannot make any definitive disclosures at present but we are in talks with all stakeholders to find a sustainable solution for UK operations,” Koushik Chatterjee had said.
