The worker union said it will intervene in the matter considering that the Dutch operations are profitable BS Reporter | Mumbai La
The worker union said it will intervene in the matter considering that the Dutch operations are profitable
BS Reporter | Mumbai
Last Updated at October 21, 2019 20:42 IST
Tata Steel Europe, a subsidiary of Tata Steel India, has decided to cut 2500 jobs, or 25 per cent of its work force, in Europe to save $930 million in costs, Dutch media outlet NH Nieuws reported on Monday.
Quoting a memo to employees, the company said Tata Steel Nederlands will have to contribute “a large part of this amount or around 170 million Euros in cost savings. The job cuts will be across Tata Steel’s Europe’s plants in Netherlands, France, England and Belgium,” the media outlet reported citing Central Works Council’s vice-chairman Gerrit Idema.
The worker union said it will intervene in the matter considering that the Dutch operations are profitable. “We know that the things are not well in the automobile industry and costs for storage are also falling but this was not expected,” the Union was quoted as saying and said the final plan of job cuts will be ready by November.
A Tata Steel spokesperson in India was not reachable for comment.
But in an earlier interaction with Indian media, the Tata group had indicated that it would invest more in its India operations and expand capacity in Odisha’s Kalinga Nagar plant instead of Europe. “The idea is to shrink the European business of Tata Steel and grow the Indian business so that in the overall pie, the contribution of European business is less,” said a top Tata group official. Last year, the Tata group had taken over Bhushan Steel’s operations for Rs 35,000 crore — boosting its Indian business. The official had said it would cut Tata Steel’s overall debt by 30 per cent.
In June 2018, Tata Steel decided to merge its European operations with Thyssenkrupp’s operations – giving it ultimately 45 per cent stake in the merged entity. But the merger idea did not go well with the labour unions of Thyssenkrupp who feared job losses. Besides, investor groups, which held 18 per cent stake in the German company, also did not approve the plans and its share price lost half of its value in the last one year.
In May this year, Tata Steel announced that its plans to merge its European operations with Thyssenkrupp of Germany collapsed following objections from the anti-trust authorities of the European Commission.
Tata Steel’s gross debt was Rs 1,00,000 crore and of this, the debt on European operation books is around 2.2 billion euros (approx Rs 17,308 crore).
In one of India Inc’s biggest takeover overseas in 2007, Tata Steel took over Corus Group Plc for about $13 billion. The takeover failed to pay dividend to Tata Steel back home as the Lehman crisis in 2008 hit global markets.
Since the takeover, Tata Steel has shut down plants in the UK and in 2018, decided to sell off all its UK plants but retained one plant in Port Talbot. It expects the UK plant to turn around this year.
Tata Steel stock is trading at Rs 360 a share and has lost 31 per cent of its value since January this year.
First Published: Mon, October 21 2019. 20:38 IST