Tata Steel has cited heavy losses on the back of the embattled UK steel industry for the move.
Tata Steel is planning to sell its entire business in the UK to cap heavy losses it has been making due to the struggling steel sector in the country.
Tata Steel, the second-largest steelmaker in Europe had recently shared plans for selling two of its plants to the Scottish government which would then help keep those factories open. The two plants -- Clydebridge and Dalzell steel facilities – would be sold to the Scottish government which would sell them to Liberty House.
Now the company has revealed plans of shelving the entire Britain business after the company officials held meetings to review the UK business' performance in Mumbai.
In a statement to the BSE, Tata Steel, after the meeting, said that the deteriorating financial performance of the UK subsidiary in the last 12 months was a concern. The statement added, "businesses in Europe and the UK were deteriorating rapidly due to structural factors, including a global oversupply of steel, significant increase in third country exports into Europe, high manufacturing cost, weakness in the domestic market demand in steel and currency volatility."
“These factors are likely to continue into the future and have significantly impacted the long-term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years,” the statement said.
Tata Steel bought Anglo-Dutch steelmaker Corus in 2007 and has since struggled to turn the giant around.
The company said it had decided to shelve its plans of transforming Strip Products UK after deeming its European subsidiary's plans unviable.
The company also said that it was still in talks with investment firm Greybull Capital over the sale of its British long products unit, which makes steel for use in construction. Talks with Greybull were announced last year.
The company said it remained in talks with the UK government, which has expressed concern about job losses in the industry. Port Talbot, though far from its 1960s peak, still employs about 4,000 people, and Tata is one of the most significant private companies in Wales, a Reuters report said.
Unions welcomed the decision not to shutter the plants but called on Tata to be a "responsible seller" and on the government to play its role, it added.
The UK government has said it is ready to work with Tata.
The company's share price has halved over the last five years.
On Wednesday, the company's shares opened nearly 2% up after the company's statement. at 1131 hours, the company's shares were trading up 1.60% or Rs 4.85 at Rs 308.75 per share.
(With inputs from Reuters)
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