Companies

Tata Steel finds a new buyer for Thailand unit

Suresh P Iyengar/Thomas K Thomas Mumbai | Updated on September 30, 2019 Published on September 30, 2019

TV Narendran, Managing Director, Tata Steel. File photo   -  The Business Line

Multiple suitors interested in Singapore business

Tata Steel is all set to sign a deal with a new buyer for its steel unit in Thailand. The company has also received interest from multiple players to acquire its assets in Singapore. The two assets are being sold as part of Tata Steel’s plans to completely exit South East Asia.

“We should close the transaction to sell our unit in Thailand soon. We have already signed an MoU and hopefully, in the next month or two that transaction will close. Then we still have the Singapore unit for which we have received interest from buyers,” T V Narendran, Managing Director, Tata Steel told BusinessLine. Narendran did not disclose the names of potential buyers.

Aborted sale agreement

In August, Tata Steel had terminated the definitive agreement signed with China’s HBIS Group Co to partially divest its equity stake in Tata Steel (Thailand) Public Company and NatSteel Holdings Pte for $327 million.

According to the agreement signed in January, HBIS was to acquire 70 per cent stake in both the companies. But this deal could not go through because HBIS could not procure the requisite approvals from the Hebei government ( Northern China province), one of the key conditions precedent for the proposed transaction.

In the earlier agreement, Tata Steel had agreed to form a joint venture with the Chinese government-owned HBIS group. Now, the Indian steelmaker is planning to completely exit the two ventures in South East Asia. The sale of assets is aimed at trimming its debt of over ₹1 lakh crore.

Europe assets

Tata Steel had also planned to sell its assets in Europe but in May, the European Commission rejected the company’s plan to merge its loss-making European operations with the German conglomerate Thyssenkrupp.

Having failed to get regulatory approval for the merger, Tata Steel has decided to sell the struggling business separately and close down unviable units.

Early this month, Tata Steel Europe closed operations at its subsidiary Orb Electrical Steels in Newport, South Wales, and at the Wolverhampton Engineering Steels Service Centre in the UK, leading to the loss of 406 jobs.

The revamp of the European operations began last May when the company put five non-core businesses on the block. It sold two units – Kalzip, an aluminium roofing and cladding business, and Firsteel, a coated steel bakeware manufacturer. Both these deals helped save 275 jobs.

One of the five non-core businesses was Cogent Electrical Steels, which consists of Orb Electrical Steels, Cogent Power Inc in Burlington, Canada, and Surahammars Bruks AB in Surahammar, Sweden.

Cogent Power sale

It signed an agreement to sell Cogent Power – which manufactures cores for electrical distribution transformers and employs nearly 300 people – to Japanese steel giant JFE Shoji Trade Corporation early this month.

It decided to retain Surahammars Bruks, which makes advanced steels for electric vehicles and employs about 100 people.

Narendran said that in Europe, the company is aiming to become cash positive to reduce its dependence on India. “The challenge before our team in Europe is that if you are cash positive, then you are no longer dependent on India for any support – you are sustainable on your own. We are closer to it happening than ever before. If the market was not so bad, we would have achieved it but because the market is so bad, it may take more time,” Narendran said.

Published on September 30, 2019
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