Companies

Work at Tata Steel half done

Suresh P Iyengar Mumbai | Updated on January 16, 2018

Challenges continue in Europe, India in the face of cheap imports



Tata Steel has faced some turbulent times during the stewardship of Cyrus Mistry. Taking over the mantle from Ratan Tata at a challenging time, Mistry has not shied away from taking tough decisions and proved he is a a man of steel.

Tata Steel, in particular, has sold a lot of assets in India and Europe even while the search for a suitor for its struggling UK operations continues. The strained relationship of Tata Steel with its UK employees and the Government over restructuring a pension plan at the Port Talbot steel plant was quite evident.

The company has had to make a provision of over ₹9,855 crore in the last two years for its European operations. Tata Steel International (Australasia) was sold to New Zealand-based Steel & Tube Holdings for NZ$ 27.5 million.

Pruning the portfolio

In a recent interview with the company’s internal communication website, Tata.com, Mistry said the challenging situations faced by some of the group’s businesses would ultimately entail hard decisions on pruning the portfolio, but this would be done with compassion and after deeper understanding of every stressed business.

“There will always be external influencers and so-called experts, who may be motivated by immediate transactional gains, goading us on to churn our portfolio. It is important that we develop our own prognosis based on knowledge and context, keeping all stakeholders in mind,” said Mistry. Back home, the company has successfully commissioned the three-million-tonne steel plant at Kalinganagar in Odisha with a huge cost over-run due to significant delays, right from land acquisition to getting various approvals.

The debt burden on the company’s books is weighing heavy as the industry faces the onslaught of cheap imports.

Weakness at home

The recovery in domestic steel demand has been slow, particularly in the infrastructure sector. In the last two years, Tata Steel has raised ₹7,480 crore through sale of assets in India.

Among the major deals, the company sold a 50 per cent stake in the Dhamra Port to L&T Infrastructure Development for ₹5,500 crore and raised ₹1,155 crore through the sale of 25 acres in Mumbai to Oberoi Realty.

Published on October 24, 2016

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