Tata Steel says in talks to sell long products biz in Europe

Tata Steel today said it is continuing talks to sell its loss-making long products business in Europe after similar negotiations with Geneva-based Klesch Group failed.

The company yesterday reported a two-fold jump in its consolidated net profit at Rs 763 crore for the June quarter.

“To hive off the long products business into a separate company (or sale), we will require 4-5 months to understand strategic options,” Tata Steel Executive Director and Chief Financial Officer Koushik Chatterjee told reporters on the sidelines of the annual general meeting here today, without offering details.

Tata Steel last week confirmed negotiations about the potential sale of its European long products business and associated distribution facilities to Klesch Group have been discontinued. The private steel giant been in talks with Klesch following the signing of an MoU in October 2014.

Chatterjee pointed out that the depreciation in the Chinese currency announced on Tuesday is likely to result in more steel imports, further impacting the domestic producers.

“The government raised import duty on some products by 2.5 per cent, but the correction in global steel prices has offset any benefit to the local steel players. After the Chinese currency devaluation, import pressure could worsen in the future.”

The company is hopeful of improvement in domestic steel demand this year due to likely increase in consumption from construction and HCV (heavy commercial vehicle) section in the auto sector, he said.

Commenting on capex plans, Chatterjee said the company has drawn up a consolidated capital expenditure plan of Rs 10,000 crore, of which 50 per cent will be spent on operations in India.

Meanwhile, Chairman Cyrus Mistry earlier said that continued challenges due to adverse currency movement and unrelenting Chinese imports into Britain may force Tata Steel to undertake further asset right-sizing in the near future.

“While the company is taking measures to make the British business more sustainable, there are challenges due to adverse movement of the pound versus the US dollar and the euro. The unrelenting Chinese imports into England may force Tata Steel to undertake further asset right-sizing in the near future,” Mistry told the shareholders at AGM.

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