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Tata Steel to study sale of UK unit after strategic review

Wednesday, March 30, 2016 - 07:08

[LONDON] Tata Steel Ltd, the metal-producing arm of India's biggest conglomerate, will consider the sale of all or part of the its UK steel division as it considers restructuring options amid weaker prices and faltering demand.

"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 Mumbai-based producer said in a statement.

A review of a planned restructuring of its UK strip products unit concluded the proposals were unaffordable, Tata said in the statement.

The company is continuing discussions with Greybull Capital LLP over a potential sale of its UK long products business and also holding talks with the UK government, it said.

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European mills are struggling to contend with a flood of cheap steel exports from China, which accounts for about half of global output, boosting competition and eroding profits worldwide.

China's exports surged to an all-time high last year as local producers contended with sinking domestic prices and a glut of material.

In February, Tata Steel reported a fiscal third-quarter loss of 21.3 billion rupees (S$436 million), versus a profit of 1.57 billion rupees a year earlier, as rising imports pressured prices.

The producer said in January it would cut another 1,050 jobs in the UK.

Global oversupply and an increase in exports to Europe are factors that are "likely to continue into the future and have significantly impacted the long-term competitive position of the UK operations," Tata Steel said in its statement.

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