Tata Steel rose 2.42% to Rs 422.50 at 9:45 IST on BSE after its UK unit reached agreement with the trade unions to progress towards the closure of its defined benefit pension scheme to future accrual.
The announcement was made after market hours yesterday, 7 December 2016.Meanwhile, the S&P BSE Sensex was up 308.26 points or 1.17% at 26,544.96.
On the BSE, 1.8 lakh shares were traded in the counter so far as against average daily volume of 8.85 lakh shares in the past one quarter. The stock had hit a high of Rs 425.20 and a low of Rs 416.10 so far during the day. The stock had hit a 52-week high of Rs 440.90 on 11 November 2016. The stock had hit a 52-week low of Rs 211.30 on 12 February 2016.
The stock had outperformed the market over the past one month till 7 December 2016, gaining 0.24% compared with the Sensex's 4.45% fall. The scrip had also outperformed the market in past one quarter, advancing 5.78% as against the Sensex's 9.3% fall.
The large-cap company has equity capital of Rs 971.22 crore. Face value per share is Rs 10.
Tata Steel UK yesterday, 7 December 2016, reached an agreement with trade unions on a number of proposals that would structurally reduce risks and help secure a more sustainable future for its UK business.
The company will next week start consultation with its employees on a proposal to close the British Steel pension scheme to future accrual. Employees would be offered a competitive defined contribution scheme.
The proposal on pensions and other changes in the employment terms are part of the ongoing transformation plan that the business is undertaking. As part of agreement all parties will work towards making Tata Steel UK a sustainable business.
The company and trade unions have also agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration in Port Talbot until 2021.
Further, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, the company will continue to invest across the UK sites to enhance the competitive position of Tata Steel UK in the European steel industry.
The company has also offered an employment pact until 2021 which supports employees through future changes by investing in their skills to support further plant upgrades, automation and other digital initiatives.
Tata Steel is the UK's largest steel manufacturer. It supplies almost 50% of UK carmakers' steel requirements, including body panels and chassis, and a range of advanced steels for the UK construction industry which help to reduce buildings' energy use.
Separately, Tata Steel announced that its subsidiary, TM International Logistics (TMILL) has divested entire stake in its wholly owned step down subsidiary TM Harbour Services (TMHSPL) to Adani Ports and Special Economic Zone (APSEZ) for a total consideration of Rs 106 crore in an all cash deal.
TKM Global GmbH, Germany and International Shipping and Logistics FZE, Dubai, subsidiaries of TMILL, hold 74.18% and 25.82% equity shares in TMHSPL respectively. TMHSPL with an annual turnover of about Rs 29 crore is engaged in the business of providing tug services at Dhamra Port and owns 3 tug boats.
Incorporated in 2002, TMILL is a joint venture company of Tata Steel, NYK Holding (Europe) BV and IQ Martrade. Headquartered in Kolkata, the company currently operates from its offices across various cities in India and overseas offices in Dubai, Germany, UK and China. TMILL offers logistics solutions. TMILL recorded an annual revenue of Rs 563 crore in FY 2016.
Shares of APSEZ rose 2.09% to Rs 282.90.
On a consolidated basis, Tata Steel reported net loss of Rs 49.38 crore in Q2 September 2016, compared with net profit of Rs 5609.43 crore in Q2 September 2015. Net sales rose 0.1% to Rs 26291.86 crore in Q2 September 2016 over Q2 September 2015.
Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. The combined Tata Steel group is one of the world's largest steel producers.
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