TRL Krosaki, Cogent Power to be part of Tata Steel portfolio rejig

MUMBAI: Tata Steel’s strategy of portfolio restructuring to bring down debt will include restructuring its refractories business, TRL Krosaki, as well as electrical steel maker, Cogent Power, the company said in a note to investors Thursday.

The assets add to its plans of forming a joint venture with thyssenkrupp in Europe, divesting South-east Asian business Nat Steel and selling off a South African iron ore mine. Portfolio restructuring could involve adjusting its stake or selling off the asset altogether.

Tata Steel holds 26.62% in TRL Krosaki, earlier called Tata Refractories and located in Belpahar, Odisha, while 51% is held by Krosaki Harima Corporation, a unit of Nippon Steel. Cogent Power is spread over the UK, Sweden and Canada. According to a report by Reuters, Tata Steel Europe has put Cogent on the block to satisfy the European Commission’s concerns on the Tata Steel-thyssenkrupp JV’s competition level.

Tata Steel became India’s largest steelmaker after acquiring the 5.6-million tonne (mt) Bhushan Steel under the insolvency law. The company had net debt of Rs 1.04 lakh crore at end of the September quarter and is pursuing a strategy of actively divesting itself from non-core businesses to unburden the balance sheet.

This has also been in line with Tata Sons chairman N Chandrasekaran’s strategy of making the group leaner by selling or merging small or loss-making businesses of group companies.

In the last seven years, Tata Steel has raised Rs 19,400 crore by divestment and the latest selloff was the Sedibeng iron ore mine in South Africa to Swiss metals and mining group IMR Metallurgical Resources AG in October for Rs 188 crore.

In India, Tata Steel wants to ramp up capacity to 30 mt by 2025 and the volume will include at least 30% of value added steels. The company will add new materials such as graphene, carbon fibre-reinforced polymer and advanced ceramics that would constitute over 10% of its revenue by 2025.

Koushik Chatterjee, chief financial officer, Tata Steel, has said acquisition of Bhushan Steel and Usha Martin was a step towards adding value added steels to its portfolio.

Tata Steel emerged as the most integrated steel producer with steelmaking capacity of 18.6 mt in FY19. While it has 100% iron ore security till 2030, the company said it can rely on captive sources for over 25% of coal requirement.