Major Indian steelmaker Tata Steel is looking to divest some electrical steel facilities as part of the current merger process between Tata Steel Europe and Thyssenkrupp, following concerns expressed by the European Commission, Tata Steel executives said Tuesday at a press conference.
Earlier this year Tata Steel Europe announced it planned to sell some of its business units, including UK electrical steel producer Cogent, and some packaging facilities as part of a drive to divest noncore assets and boost sustainability at its key European steel strip producing operations at IJmuiden and Port Talbot, ahead of its planned merger with Thyssenkrupp.
Tata has electrical steel units in the UK and Canada and its potential divestments in this area will “prevent overlap” with Thyssenkrupp, Koushik Chatterjee, Tata’s executive director and chief financial officer, told reporters in Mumbai Tuesday. The company has now closed the sale of German aluminum roofing and cladding business Kalzip, he said.
These moves come amid a “constructive engagement with the European Commission and Thyssenkrupp” as the EC has now entered a phase two review of the proposed merger, expected to last 90 working days, said Chatterjee and Tata Steel CEO T.V. Narendran.
The proposed merger is supported by many industry players, according to the executives. “The industrial logic and rationale remains very strong for a consolidation in Europe,” Chatterjee said. “This is the right rationale … for the sustainability of the entire business.”
Tata reported strong financial and operational results in the quarter ending September 30.
Consolidated deliveries grew by 13% quarter on quarter and 15% year on year to 7.42 million mt. Increased sales to the automotive and industrial products segments led the company, India’s second-largest private sector steel producer, to report consolidated net profit of Rupees 3,116 crores in the September quarter, up 206% from Rupees 1,018 crores in the year-ago period. The company attributed this to better sales and stronger steel prices in a traditionally weak quarter.
Narendran said more protectionist trade measures in the steel sector globally had had less impact than expected on the company due to strong domestic steel demand in both India and China. While steel exports from both India and China into the EU had fallen, the CEO expressed some concern over how Turkish steel had stepped into that space, having been diverted from the US market as a result of tariffs.
At the same time India’s weak rupee had given India some “comfort” against high steel import levels, he said.
Tata has captive iron ore mines in India and is not a market player in iron ore. However, Tata sees huge potential to boost the mining industry in India, and changes in government policy in this area are “encouraging,” said Narendran.
— Diana Kinch
