Tata Steel on Friday said that it was continuing to pursue European consolidation strategy and was in talks with Thyssenkrupp AG for potential joint venture (JV) for European steel business, following alleged disclosure from ousted chairman Cyrus Mistry that some group companies could face a potential writedown of 18 billion dollars.
Tata Steel said in a BSE filing that in response to the recent media reports, the company continues to pursue its European consolidation strategy and the talks with Thyssenkrupp AG (as announced on 8th July, 2016) for a potential JV – joint venture of its European steel business are presently ongoing and progressing.
It added that there could be however no guarantee that these talks would culminate in a definitive agreement between the parties. The firm put it on record that Tata Steel UK was also deeply engaged with all relevant stakeholders in the United Kingdom to find a structural solution and a way forward in regards to the affordability of the legacy pension scheme liabilities.
Tata Steel said that it was pursuing a completely separate process for the potential sale of the South Yorkshire-based Specialty Steels business in UK. It also clarified that any further announcement on the issue would be made at an appropriate time.
Meanwhile, the management team and the employees of Tata Steel continue to work on enhancing and improving the underlying performance of the European business amidst challenging business conditions, the company added. These comments from the firm come against the backdrop of the high-profile ‘Tata-Mistry’ case or ‘Tata-Mistry divorce’ to put it rhetorically.
In an explosive letter to Tata Sons board members, Mistry leveled a series of allegations against Ratan Tata and challenged that he was pushed into a position of a ‘lame duck’ chairman and changes in the decision-making process gave birth to alternative power centres in the massive Tata group. Cyrus Mistry warned that the salt-to-software conglomerate might face writedowns due to 5 unprofitable businesses he had inherited.
Cyrus Mistry further said that he had inherited a debt-laden enterprise saddled with losses and went on further to single out Indian Hotels, passenger-vehicle operations of Tata Motors, European operations of Tata Steel, part of the group’s power unit and its telecommunications ancillary as ‘legacy hotspots’.
The Tata-Mistry case has had a negative impact on the Tata stocks. However, Tata Steel share price has shown signs of recovery. The stock closed at Rs.405.45, over 2 per cent up on the National Stock Exchange (NSE).
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