Mumbai: Tata Steel Ltd is “in discussion” with the UK government to find a “sustainable, structural solution” for the firm’s business in that country, company chairman N Chandrasekaran has told its shareholders, allaying fears that bailout talks between the two have broken off.
“We have been very actively engaged in Tata Steel Europe to find a sustainable, structural solution. Particularly in the UK, we are in discussion with the UK government,” Chandrasekaran said at Tata Steel’s virtual AGM on Thursday.
His statement repudiates UK media reports last week that the government’s talks with Tata Steel and Jaguar Land Rover between the two parties for government funding to help them overcome the economic downturn caused by the Covid-19 pandemic had ended.
Shareholders raised several questions about the firm’s European operations at the AGM as its auditors had recently said they are doubtful about Tata Steel Europe’s ability to raise sufficient capital in the near term and continue as a going concern.
“In the UK we are still in talks with the government and we will do what is good for the company,” Chandrasekaran said, responding to a shareholder’s query. Tata Steel managing director T V Narendran, too, said the company is continuing talks with the UK and European Union for support.
“Covid-19 further impacted the already struggling steel demand in Europe and there are signs of slow recovery,” he said. Tata Steel had reported a consolidated net loss of Rs 4,609 crore for the quarter ended June, mainly due to its loss-making Europe operations.
Tata Steel Europe’s consolidated earnings before interest, tax and depreciation reported a loss of Rs 625 crore. Chandrasekaran said Tata Steel’s move to simplify business processes at its European arm is making progress.
The company has taken several steps to reorganise its various businesses, and had reduced the number of its subsidiaries to 151 from over 300 by the end of FY20.
In India, Tata Steel will focus on entering into new segments like lifting and excavation, oil and gas, and pre-engineered buildings going ahead, Chandrasekaran said. “In India, the merger of Tata Steel BSL with Tata Steel is poised to take shape this year,” he said. “The company is on course of reorganising subsidiaries into four segments – mining, long products, downstream, and infrastructure and utilities – instead of just flats.”