Ratan Tata seen as adverse to exiting UK biz, confusion reigns
The company's loss-making unit Port Talbot is saddled with a huge liability of British Pension Scheme for its 1.4 lakh employees.
By Megha Mandavia, ET Bureau | Updated:
MUMBAI: Confusion reigns at Tata Steel regarding the future of UK steel business as Chairman Cyrus Mistry steps down and Ratan Tata makes a comeback.
Tata Steel is currently in discussion with German company ThyssenKrupp for a joint venture for its Netherlands and UK business, which includes loss-making Port Talbot plant. Port Talbot plant was up for sale in March and seven bidders were shortlisted from across the globe. However, the sale was put on hold a JV was pursued instead.
Sources close to the matter say that Cyrus Mistry was keen to get rid of the struggling UK business but was held back due to the objections from Ratan Tata, who bought the behemoth in 2007 at the peak of commodity cycle for $12.1 billion making it then one of the largest overseas acquisition by an Indian company.
"The conditions of the sale or joint venture are likely to change as Tata is back. The change in top management is definitely going to have a bearing on the future of Port Talbot as Ratan Tata originally bought it," said a person close to the matter. "Ratan Tata is much more accessible than Mistry. We are waiting for updates."
The company's loss-making unit Port Talbot is saddled with a huge liability of British Pension Scheme for its 1.4 lakh employees including the present and retired employees. The scheme has been a sticking point for many likely buyers.
Also read: Analysts expect knee jerk reaction to Cyrus Mistry ouster
It was put on the block when all efforts to turnaround the business failed. The British steel industry is under a crisis after cheaper Chinese imports flooded the market driving prices down.
Tata Steel shares have risen 31 percent to Rs. 426.20 a piece since the announcement in March to exit the UK business.
Tata Steel is currently in discussion with German company ThyssenKrupp for a joint venture for its Netherlands and UK business, which includes loss-making Port Talbot plant. Port Talbot plant was up for sale in March and seven bidders were shortlisted from across the globe. However, the sale was put on hold a JV was pursued instead.
Sources close to the matter say that Cyrus Mistry was keen to get rid of the struggling UK business but was held back due to the objections from Ratan Tata, who bought the behemoth in 2007 at the peak of commodity cycle for $12.1 billion making it then one of the largest overseas acquisition by an Indian company.
"The conditions of the sale or joint venture are likely to change as Tata is back. The change in top management is definitely going to have a bearing on the future of Port Talbot as Ratan Tata originally bought it," said a person close to the matter. "Ratan Tata is much more accessible than Mistry. We are waiting for updates."
The company's loss-making unit Port Talbot is saddled with a huge liability of British Pension Scheme for its 1.4 lakh employees including the present and retired employees. The scheme has been a sticking point for many likely buyers.
Also read: Analysts expect knee jerk reaction to Cyrus Mistry ouster
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It was put on the block when all efforts to turnaround the business failed. The British steel industry is under a crisis after cheaper Chinese imports flooded the market driving prices down.
Tata Steel shares have risen 31 percent to Rs. 426.20 a piece since the announcement in March to exit the UK business.
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Tata Sons on Monday announced that its Board has replaced Cyrus P Mistry as Chairman of Tata Sons at a meeting held in Mumbai. An insider said, there was an inherent bureaucracy in the system that has gone unchallenged for years.
While Mistry, who would have completed four years at the helm in December, or any others from the group is yet to give out a reason behind this sudden decision, here are our guesses.
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