Tata Steel continues to be in talks with the UK government on possible financial aid for the company's operations in the country, Chairman N Chandrasekaran said on August 20.
Responding to concerns raised by the company shareholders over a virtual AGM, Chandrasekaran said, "talks are not over." He, however, underlined that the UK operations are not profitable and that it "continues to be a drag."
The clarification comes days after reports emerged from the UK that the government there has refused to support its operations there. The two sides were in talks for possible financial assistance.
"The government concluded the Indian multinational was sufficiently financed and didn’t qualify for taxpayer support," the Financial Times reported.
The talks are critical for the future of the company's operations in the country. Its other major facility in Europe, located in the Netherlands has also faced problems in the form of protest from employees.
Apart from clarifying that the situation was not as described by reports, Chandrasekaran also played down the auditor's note, in the recently announced Q1 results, doubting if the UK operations can continue as a going concern.
The Tata Steel Chairman signalled that the auditor's note was more a regulatory requirement, and said, "Tata Sons and Tata Steel continue to do what is right."
Tata Steel on August 13, had reported a consolidated net loss of Rs 4,648.13 crore for the June quarter of FY21. It had reported a loss of 1,615.35 crore in the March quarter and a profit of Rs 714.03 crore in the June quarter of FY20.
Talking about the European operations, Executive Director and CFO Koushik Chatterjee, said: "Tata Steel Europe's performance was affected by lower deliveries and a sharp decline in European spreads to an unsustainably low level. As a result, our consolidated adjusted EBITDA dropped to Rs 1,038 crore."
At the AGM, Chandrasekaran said that the company is striving to find a solution in this fiscal year. "It could be matter of months before we have a decision. If it's not a successful outcome, we will be thinking about alternate options. We are looking for a solution that is lasting," he said.
Change in geographical mix
Earlier, while addressing the shareholders, Chandrasekaran pointed out the change in the company's geographical mix.
"While earlier one-third of the business was in India, and was profitable, two-thirds was international and was not profitable. We have changed the mix. Now, two-thirds of the business is in India," he said.
Over the years, the company has invested Rs 75,000 crore in the last four years to increase its India business. The investment included the Rs 35,000 crore it has spent on the new facility in Kalinganagar, in Odisha. The rest of the money has been used to acquire Bhushan Steel and Usha Martin.
Responding to shareholders concerns over the company debt, which stood at Rs, 1,04,779 as on March 2020, the Chairman said that the aim is to reduce this to Rs 75,000 crore, "as fast as possible."
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
