Tata Steel to undertake major restructuring in Europe & India

Indian steel giant Tata Steel has begun a major restructuring exercise in order to simplify operations and its overall group structure, largely through the cutting down on and restructuring of subsidiaries in Europe and India.

“In Europe, we have some 300 subsidiaries. The clean-up has already started and we are looking to reduce them by 100 to 120 this year,” said TV Narendran, CEO, Tata Steel. 

Some of Tata's over 300 European subsidiaries were created as far back as the 1880s.

"They have old liabilities and issues which need to be sorted out," Mr Narendran said, adding, "The journey is a bit tedious". 

Tata Steel has 30 subsidiaries in its native India and the restructuring exercise will involve a reorganisation into four areas, Narendran has said; long products, downstream, infrastructure & utilities and mining assets.

"We are thinking of creating a downstream company for many of our assets. Infrastructure and utility services arms could be merged into another company and we could have a mining company for our mining assets," he said. This will simplify overall business structure, Narendran said. “The restructuring move could be particularly useful in India, where there are operating companies that could unlock much value”.

The CEO also confirmed that, in order to combat the effects of the global slowdown in steel sales, capital expenditure plans are to be slashed by 25% over the next year.

There will also be a focus on services and solutions as part of Tata's attempts to insulate itself the cyclical nature of the steel sector, with the segment expected to contribute around 20% of its overall revenue going forward.

The European steel industry is in a precarious state at present, with rising levels of imports following US President Donald Trump's imposition of tariffs on the metal entering the US.

Tata Steel's UK subsidiary said over the weekend that the company is losing £1-million per day due to repair work slowing down production, as well continued global uncertainty over tariffs, as well as the country's exit from the European Union.

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