Tata Steel's UK divestment, JV plan on track, says Koushik Chatterjee

MUMBAI: Bombay House, Tata Group's power centre, saw analysts from brokerages and fund managers seeking clarity on the future of the company's loss-making UK operations, after the return of Ratan Tata as interim chairman.
Koushik Chatterjee, Tata Steel's executive director and group chief financial officer, sought to quell fears that the company would go back on its intentions to downsize, or exit the business, which has been a drain on the balance sheet since its acquisition almost 10 years back.He also dismissed former chairman Cyrus Mistry's claim that only a part of the potential $10 billion impairment charge has been taken yet.
"Koushik said there will be no change in Tata Steel UK strategy because of the change in the leadership. He said the potential joint venture with Thyssen Krupp may take long as the British pension scheme issue has be resolved," said an analyst who did not want to be named. "It seemed like a long-term plan right now."
Another analyst said Chatterjee claimed that the $10 billion figure quoted in Mistry's leaked letter to the Tata Sons board was hypothetical and whatever was required had been done already, adding that the CFO stressed that the sale of speciality business will be sold soon.
Tata Steel in March decided to exit the UK's struggling business in whole or parts after the operations remained unprofitable for almost a decade. However, the operations are saddled with a huge liability of British Pension Scheme of 15 billion pounds for its 1.4 lakh employees including the current and retired employees. The scheme has been a sticking point for many likely buyers.
JP Morgan, Deutsche Equities, Credit Suisse, HSBC, Morgan Stanley were among the twelve brokerages invited by Tata Steel. Fund managers from HDFC Asset Management, Birla Sunlife Asset Management and Reliance Capital Asset Management were also invited apart from Life Insurance Corporation (LIC), Tata Steel's single largest shareholder after Tata Sons.
The meeting between Tata Steel and analysts lasted more than an hour, where Chatterjee explained Tata Steel's wish to move the pension scheme to fixed defined contribution from defined benefit to lower uncertainty in payouts.