We cannot continue to bleed, find a buyer soon, Tata Steel CEO tells UK MPs
London: Tata Steel UK's chief executive Bimlendra Jha has told a British Parliamentary Committee that the Indian conglomerate ‘cannot continue to bleed’ from its loss making steel units in the country and that the British government needs to do more to help finding a buyer for its steel plants.
Jha told the House of Commons Business Select Committee that structural disadvantages in the UK, such as extremely high energy costs, were largely the reason for the crisis in the steel industry.
"There is no dead drop time that has been given, though you will appreciate with the kind of losses that there are, urgency is important. What if no buyer emerges? We cannot continue to bleed," Jha said.
"We have seen over a period of time that manufacturing in Britain has been on a decline. If we were at the same electricity costs as Germany, then (Tata Steel UK) would be 40 million pounds better off - we would not be having negative numbers. We would not be selling the business if we were not losing money," Jha added.
He also clarified that the company did not want to split up its UK business by selling it to different buyers.
Jha warned that splitting off Port Talbot in south Wales would cause damage to the pension scheme because more than 4,000 workers would stop making contributions.
"We would not deal with somebody saying leave alone Port Talbot and give us the rest. That is not a solution that's acceptable," Jha explained.
He warned the MPs that the company's 15 billion pounds pension liability needed to be addressed to help find a buyer.
The UK government has said it is looking at the pension scheme, which any buyer would have to inherit, to see if it could be separated from the business.
"If we don't solve it [pensions], we are staring at some very bad consequences for the taxpayer ... We are staring at a huge economic and social disaster," Jha warned.
The pension fund has more than 130,000 members and a deficit of around 485 million pounds.
UK business secretary Sajid Javid told the committee that pension fund trustees were in talks with the pensions regulator. He reiterated that the UK government would not take a stake of more than 25 per cent in Tata Steel's UK assets.
"Twenty five per cent was the limit that I thought was necessary to show that on the one hand you're serious about helping ... but also not to put off potential investors by saying this is something the government seeks to control," he said, adding that the government was keen to secure the sale of Tata Steel's UK units soon.
Javid admitted that "with the benefit of hindsight" he should have gone to Mumbai in late March for a Tata board meeting which concluded it should sell its UK business, rather travel to Australia on a business trip with his daughter.
This one decision has attracted a lot of media flak for the minister over his handling of the steel crisis.
With PTI Inputs