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Tata Steel to recast SE Asian operations

After restructuring its loss-making European operations by forming an equal joint venture with Thyssenkrupp, Tata Steel is now looking at simplifying its southeast Asian operations.

Answering a shareholder query at the company’s Annual General Meeting, Natarajan Chandrasekaran, chairman Tata Sons, said, “One of the things that the company is looking at is all assets that are sub-scale or non-core... what we can simplify... we are looking at that.”

In southeast Asia, Tata Steel operates through NatSteel Holdings Pte. Ltd. (Singapore) and Tata Steel Thailand.

Both units have reported contraction in operational profit, despite improved selling prices.

Both are also suffering due to lack of demand caused by a slump in construction activity and elevated scrap prices in Singapore and Thailand, the company said in its annual report for 2017-2018.

Operations in both this contributed ₹9,542 crore, or 16%, to Tata Steel’s total revenue of ₹60,519 crore in FY18 but only ₹437 crore, or 2%, to the total Ebitda of ₹22,045 crore. On debt, Mr. Chandrasekaran said, “Our existing debt of ₹69,215 crore will go up to ₹85,000 crore after the acquisition of Bhushan Steel. The debt will reduce by ₹20,000 crore once the JV with Thyssenkrupp is done.”

Eyeing fresh funds

The company is looking to borrow fresh funds to tune of $3.5 billion to refinance high-cost debts. Of this, €2.5 billion loans on the books of Tata Steel Europe will be refinanced before the JV with Thyssenkrupp. Tata Steel’s debt may rise even further if it bags Bhushan Power and Steel Limited in the insolvency proceedings against the latter.

Confirming this, Koushik Chatterjee, Group CFO told The Hindu, “We have to strategise the acquisition. Of course, it will have a debt component.”

The National Company Law Appellate Tribunal on Friday directed the committee of creditors of Bhushan Power and Steel to consider the resolution plans submitted by three firms — Tata Steel, Liberty House and JSW Steel.

Source: The Hindu /

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