Tata Steel is up in the green

Tata Steel is up in the green today since morning, figuring amongst the top gainers of the day. Two developments – first is the all-important deal it has reached with its UK trade union.

Tata Steel has reached an agreement with trade unions on a number of proposals that would structurally reduce risks and help secure a more sustainable future for its UK business. The company will next week start consultation with its employees on a proposal to close the British Steel Pension Scheme to future accrual. Employees would be offered a competitive defined contribution scheme.

The company and trade unions have also agreed on the principle that subject to the structural de-risking and de-linking of the British Steel Pension Scheme fund from the business, Tata Steel UK will continue the existing blast furnace configuration in Port Talbot until 2021. Further, based on achieving the necessary financial performance and cash flows as per the transformation plan of the UK business, the company will continue to invest across the UK sites to enhance the competitive position of Tata Steel UK in the European steel industry. The company has also offered an employment pact until 2021 which supports employees through future changes by investing in their skills to support further plant upgrades, automation and other digital initiatives.

Tata steel has also offered to invest 1 billion pounds in its UK business over the next 10 years, in return for which its wants to close the 14,000 employees’ costly final salary pension scheme to future accruals and replace it with a defined contribution scheme. From the earlier 3%, Tata’s contribution is now hiked to 10%. This plan will go to vote with the Unions in January 2017.

The market is happy that is now smoothens the way for the merger of its European assets with Germany’s Thyssenkrupp.

The second development was that its subsidiary, TM International Logistics Ltd (TMILL) has divested its entire stake in its wholly-owned subsidiary TM Harbour Services to Adani Ports and Special Economic Zone for Rs 106 crore in an all cash deal.