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Tata Steel to shut 3 ailing subsidiaries
Arijit De in Mumbai |
January 23, 2003 12:41 IST
The Tata group, as part of a restructuring of the subsidiaries of its flagship Tata Steel, has decided to exit from three of its ailing arms: Tata Construction Projects, Tata Korf Engineering and Neelachal Refractories.
Confirming the development, Tata Steel managing director B Muthuraman told Business Standard: "We have been looking at reorganising our subsidiaries for some time. We have now decided we will be closing Tata Construction Projects, Tata Korf and Neelachal Refractories. At this stage, I cannot comment on the future of the other subsidiaries."
"Our focus is on companies that are economic value added (EVA)-positive, and those that could turn that way, over time. On the basis of this, we have taken a decision that we cannot continue with these three," he added.
He said Tata Steel was not just taking a relook at its subsidiaries but also at its non-steel businesses, which include bearings and tubes.
"In the case of Neelachal Refractories, the operations had become unviable. But Tata Refractories, of which Neelachal is a subsidiary, is profitable and we will be continuing with it," Muthuraman said. Both Tata Construction Projects and Tata Korf have been suffering because of the recession in the engineering business.
In the case of Tata Korf, Tata Steel had bought out German major Mannesman's 39 per cent stake last year and was looking at selling about 50 per cent to another strategic partner. It was in talks with two US companies for the deal, which eventually came unstuck. Tata Korf posted losses last year and its reserves were wiped out.
The Tatas had earlier mandated McKinsey & Co to work on a plan to restructure Tata Steel's subsidiaries, which was submitted in end-2001. As a result, an earlier plan to merge five engineering subsidiaries into TRF Ltd (formerly Tata Robbins Fraser) was reversed.
Muthuraman said: "We are taking a lot of time on deciding what to do with the subsidiaries. We are holding talks with every subsidiary to see what can be done, and whether their fortunes can be reversed."