Tata Steel on Friday said it continues to pursue European consolidation strategy and is in talks with Thyssenkrupp AG for potential JV for European steel business, following purported disclosure from ousted chairman Cyrus Mistry that some group firms could face a potential writedown of $18 billion.
"In response to the recent media reports, Tata Steel would like to clarify that it continues to pursue its European consolidation strategy and the talks with thyssenkrupp AG (as announced on July 8, 2016) for a potential joint venture of its European steel business are currently ongoing and progressing," Tata Steel said in a BSE filing. "However, there can be no guarantee that these talks will result in a definitive agreement between the parties," it added. The company put it on record that Tata Steel UK is also deeply engaged with all relevant stakeholders in the UK to find a structural solution and a way forward with regard to the affordability of the legacy pension scheme liabilities. Tata Steel said it is pursuing a separate process for the potential sale of the South Yorkshire-based Specialty Steels business in the UK.
It clarified that any further announcement on the matter will be made at an appropriate time. Meanwhile, the management team and the employees of the company continue to work on improving the underlying performance of the European business amid challenging business conditions, the company said. These comments from the company come against the backdrop of the high-profile Tata-Mistry case. In an explosive communication to Tata Sons board members, Mistry levelled a series of allegations against Ratan Tata and contended that he was pushed into a position of "lame duck" chairman and changes in the decision-making process created alternative power centres in the Tata group.
He warned that the salt-to-software conglomerate may face writedowns because of five unprofitable businesses he inherited. Mistry further said he inherited a debt-laden enterprise saddled with losses and went on to single out Indian Hotels Co, passenger-vehicle operations of Tata Motors, European operations of Tata Steel, part of the group's power unit and its telecommunications subsidiary as "legacy hotspots".