Tata Steel announces design to put its UK biz up for sale
31 March 2016 12:10 AM GMT
Tata Steel has put its entire UK business on the block, putting thousands of jobs at risk amid a deepening crisis in the country's once-storied sector that the Indian conglomerate had entered nearly a decade ago with a $14-billion takeover with much fanfare.
Jolted by the decision, announced in the wee hours on Wednesday by Tata Steel after a marathon board meeting at its Mumbai headquarters, the unions have given a call for nationalisation while the government authorities have assured nearly 17,000 workers at the company plants across the UK that all possible options would be explored to safeguard their interest.
Tata Steel, one of the flagships of the over $100-billion Indian conglomerate Tata Group, said it has decided to "explore all options for for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts" amid a "deteriorating financial performance of the UK subsidiary in the last 12 months". Tatas had entered the British steel sector, which once dominated the British economy, in early 2007 with acquisition of Anglo-Dutch steelmaker Corus after a fiercely fought takeover battle -- which till date remains the biggest ever overseas acquisition by an Indian group.
Tata Steel had emerged the winner after a months-long takeover battle with Brazilian rival CSN that ended with a regulator-conducted auction running into nine rounds.
The decision was taken by Tata Steel, which employs nearly 17,000 people across UK, after intense deliberations till late night on Tuesday, including with the members of British trade unions.
Tatas have struggled hard to turn around Corus, which it renamed as Tata Steel Europe in 2010 and analysts feel it could be really difficult to find a buyer.
They attributed the decision for sale of the business to the huge loans taken for Corus acquisition, as also to the tough environment being faced by steel firms in Europe, particularly in the UK.
Trade unions urge British PM David Cameron to nationalise Tata plants
Amid Tata Steel’s plans to exit its loss-making UK business, trade unions asked British Prime Minister David Camaroon to save the crisis-ridden sector and demanded nationalisation of the mills. Tata Steel, the second largest steelmaker in Europe, announced plans to sell UK business as it battles to control its “deteriorating financial performance”, almost a decade after it bought steel giant Corus for over $14 billion. Commenting on the “uncertain future” of Tata Steel UK, Britain’s biggest trade union Unite’s General Secretary Len McCluskey on Wednesday said: “The growing chorus of calls for renationalisation cannot be ignored by the Conservative government.”
McCluskey said the message must go out now from the Prime Minister that he will take all steps to keep steel plants functioning and people in work. “We are now in the grip of an industrial crisis. Decisions taken in the days to come will determine not just the future of 19,000 workers and their families, across 14 sites, but the very success of this government’s own economic programme,” he said. This is the time for the government to say categorically that these assets will be taken into safe-keeping because without them the economy will not flourish, McCluskey said.
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