Earlier, the proposed merger of Tata Steel's European operations with Thyssenkrupp of Germany hit a roadblock after the European Commission raised many objections to the deal.
Tata Steel has outlaid a capital expenditure of Rs 3,000 crore for its European operations as its focus is to make the business “stronger”, the company’s CEO and Managing Director T V Narendran said.
He made the remarks while responding to a question related to the company’s strategy with respect to the Europe business, which Tata Steel could not sell earlier due to multiple reasons.
“For (financial year) 2022, we have guided that our capex will be…Rs 3,000 crore for Europe. It is more for sustenance capex, environment related capex, capex on the product mix, enhancement that we are doing particularly in the Netherlands,” he told PTI.
In Europe, he said, the company’s operation is being separated into Tata Steel Netherlands and Tata Steel UK which would help in cost efficiencies and management focus. The European business this year will be cash positive in terms of EBIDTA and PAT. It will be a strong year for European businesses as well.
Tata Steel’s focus is on the performance of European business. “We are not actively looking for any buyers. If you make the business stronger, that helps with the value of the business,” Narendran said, replying to a question whether the plans to sell the business have been dropped.
Speaking on the sale of its assets in Europe, the CEO further said it was SSAB which had reached out to Tata Steel. “We had not gone looking for them. The only time when we were actively working on it was when the Thyssenkrupp proposal was there…”
SSAB was interested, they pursued then dropped it. Tata Steel is under no pressure to take any hasty action. The company will continue to focus on performance of the business, he said.
According to the company, steel deliveries at Tata Steel Europe increased by 17.4 per cent year-on-year to 2.33 million tonne in the April-June quarter of the ongoing fiscal, and EBITDA improved sharply to 150 million pounds (around Rs 1,544 crore) in the first quarter. The India business recorded an EBITDA of Rs 13,946 crore during the period.
On January 29, Tata Steel had announced that Swedish steel maker SSAB had withdrawn its initial interest for its Netherlands business. Tata Steel was in talks with SSAB on the potential sale of its Netherlands business, including Ijmuiden steelworks.
Earlier, the proposed merger of Tata Steel’s European operations with Thyssenkrupp of Germany hit a roadblock after the European Commission raised many objections to the deal.
Tata Steel Europe and Thyssenkrupp had signed definitive agreements in June 2018 to combine their steel businesses in Europe to create a 50-50 pan European joint venture company which would have been the continent’s second-largest steel company after Lakshmi Mittal’s ArcelorMittal.