Tata Group’s Pullout Plan From Selling UK Business May Face Limbo

Stephen Kinnock, the Labour Party MP from Aberavon constituency in south Wales, seeks for guarantee from Tata Steel Limited for long run operations subject to abandoning its planned sale of loss making UK business. The Mumbai based company has announced for selling UK steel industry during March. The announcement has put thousands of jobs at risk.

Analysts have predicted for two bids- the UK government may acquire a 25% stake and allowing changes to Tata’s pension scheme to promote the sale. But following recent shakes up in the steel industry and related markets, Tata has been rumored to get a U-turn from its selling plan. The steel manufacturer has announced on May 25 narrowing down its losses during the fourth quarter, reports BBC.

If Tata abandons its plan for selling its Port Talbot plant in Kinnock’s electoral constituency, around 11,000 jobs across the country may be saved. Tata Steel owners are now evaluating the performance of the UK steel making arm and studying the feasibility of financial support available from government’s behalf. However, the selling process is still continuing with short listing of four strong bidders from a field of seven, reports The Guardian quoting unnamed sources close to Tata Steel.

The UK government has proposed slashing £14 billion liabilities of British Steel Pension Scheme. The scheme has been underwritten by Tata with a deficit of £700 million. According to the government proposal, annual rise in payouts from the final salary scheme will be linked to inflation as defined by the consumer prices index. The proposed change is expected to cut scheme’s liabilities by £2.5 billion paving the way for sale of Tata Steel UK, reports The Economic Times.

Steel workers and their families in Kinnock’s constituency have been passing through hell since March while the sale has been announced. Apparently enraged with Tata’s pull out plan, the Labour Party MP believes, British Steel’s sell planning and subsequent pull out decision may broaden the degrees of skepticism and even anger unless pledging for long term operation.     

On the contrary, Tata’s reiterated commitment for the sales process has escalated the level of imagination. However, identities of the short listed bidders for the sale have also been rumored through no announcement for short listing is yet to make public.

The three bidders are Liberty House of Indian businessman Sanjeev Gupta, Greybull Capital and Endless. Greybull is a London based family investment fund while the last is a Leeds-based turnaround fund. Endless is rumored to be backed by American billionaire Wilbur Ross.