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Shareholders quiz management of Tata Steel on UK unit

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(This story originally appeared in image on Aug 21, 2020)

Mumbai: Several shareholders of Tata Steel on Thursday questioned the management, led by chairman N Chandrasekaran, on the future of its unprofitable UK unit after the Indian company expressed doubts over the British arm’s ability to continue as a going concern and meet liquidity requirements. They also enquired about the status of the UK government’s bailout package for the British unit after international media reported that rescue talks between the two had failed.

“Talks are not over,” responded Chandrasekaran. The financial aid is important for the UK unit, which “continues to be a drag”on Tata Steel’s performance since it became part of the Indian company from 2007. Over the years, the parent wrote down the UK unit’s asset value and had even attempted to sell the business. “We are hoping to find a solution for the UK business this fiscal. If we are unsuccessful, then we will think about alternative options,” Chandrasekaran told Tata Steel’s shareholders at the company’s annual general meeting, held via an audio-visual medium.

Regarding the doubt over the continuity of the UK operations as a going concern, Chandrasekaran said the auditors’ note was not a qualification but a comment made by them. “Tata Sons (promoter) and Tata Steel are committed to do everything that is right.”

Tata Steel’s Netherlands unit too continues to weigh on the company’s balance sheet. It had earlier looked to hive off the Netherlands unit into a joint venture with Germany’s Thyssenkrupp, but the deal fell through due to regulatory issues.

Some of the shareholders also raised concerns over the company’s Rs 1.2-lakh-crore debt. To this, Chandrasekaran replied that the company will be restructuring operations and selling non-core assets to bring down the debt to Rs 75,000 crore.

The chairman also pointed out to shareholders that the company’s geographical composition has changed. “In fiscal 2017, the geographical composition of Tata Steel was one-third India and two-thirds international. One-third was profitable and two-thirds was not profitable. We have steadily changed this mix to a position where two-thirds of the business comes from India.” The composition changed after Tata Steel invested Rs 75,000 crore in the domestic market to tap growth opportunities here. Over the last four fiscals, it spent Rs 40,000 crore to acquire Bhushan Steel and Usha Martin Steel and the rest in building a new plant in Odisha.

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