- Shortlisted bidders for U.K. assets are doing due diligence
- Can’t talk about European joint venture talks just yet
Tata Steel Ltd. posted a third straight quarterly loss on account of a global supply glut that pressured prices and discontinued operations at its long product business in the U.K.
The Mumbai-based company’s net loss widened to 31.8 billion rupees ($475 million) in the three months through June from a restated 3.17 billion rupees loss a year ago. This includes net loss from discontinued operations of 33.6 billion rupees in the latest quarter, according to a company statement Monday. Sales for the quarter slipped to 264.1 billion rupees, missing analysts’ estimates.
China, maker of half the world’s steel, has flooded markets from Europe to India with cheaper supplies, forcing competitors to lower prices and eroding their profits. While India’s government has imposed import curbs, Steel Authority of India Ltd., the nation’s biggest mill, still reported a fifth consecutive quarterly loss last week, even as it increases capacity to meet government infrastructure spending plans.
Tata Steel put the for-sale sign on its U.K. business in March, after years of losses, before suspending the process in the wake of Britain’s decision to quit the European Union. It discontinued operations of its long product business in the U.K. and completed its sale to Greybull Capital on May 31, it said in the statement. The company has also announced talks with Germany’s Thyssenkrupp AG to combine their European operations, which could include Tata’s U.K. operations.
“It is not time yet to make definitive disclosures on Europe joint venture talks,” Koushik Chatterjee, Tata Steel’s group executive director told reporters in Mumbai. There are complications related to pension payouts, Chatterjee said, with bidders saying that this payment should be separated from the asset sale process in U.K.
“The shortlisted bidders for U.K.’s specialty steel and pipe mills units have been given access for due diligence and management meetings,” Chatterjee said.
The shares of Tata Steel, which reported earnings after the trading hours, closed 5.4 percent lower at 373.3 rupees in Mumbai outstripping the 1.5 percent fall in the benchmark S&P BSE Sensex. The stock has advanced 44 percent this year to become the best performer on Sensex, benefiting from the government’s import restrictions.