Tata Steel to sell its UK business
Concerned over its dismal financial performance in the European steel market, particularly in the UK for the last 12 months, Tata Steel on Wednesday decided to sell its UK steel business. The company noted that the global steel demand, particularly in the European market, had been deteriorating after the 2008 financial crisis. Trading conditions in the UK have gone worse because of several regional and international factors, most notably global oversupply of steel, weakness in demand of the metal, high manufacturing cost, low-performing currency and an influx of third country exports in to the market, have compelled the company to opt out of the UK market. “These factors are likely to continue into the future and have significantly impacted the long term competition position of the UK operations in spite of several initiatives taken by the management and workers of the business in the recent years,” Tata Group said in its announcement on Wednesday. “Even under these adverse market conditions, Tata Steel Group has extended substantial financial support to the UK business and suffered asset impairment of more than $2 billion in the last five years,” the company said. The Tata Steel Board reviewed the restricting and revival plan in consultation with an internationally-reputed consultancy firm for its UK-based steel business, and came to a conclusion that the plan is unaffordable and requires significant capital commitments in addition to material funding support over the next two years. The Board, based on its review, figured out that continuing its UK operation will be a risky business and the likelihood of delivery was uncertain. Tata Steel Board also advised its European holding company, Tata Steel Europe, to explore all possibilities of portfolio restructuring. “Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe Board will be advised to evaluate and implement the most feasible option in a time-bound manner,” the company said. Responding to Tata’s sudden announcement, General Secretary of the steelworkers' trade union Community Roy Rickhuss said, “There is also a crucial role for both the Welsh and UK governments to do all they can to ensure a future for Tata’s remaining UK steel businesses and to provide every assistance to secure a buyer that will continue steel making. We want a detailed plan of action to find buyers and build confidence in potential investors in UK steel.”
March 30, 2016 | 01:50pm IST
to success.