Tata Steel agrees 'in principle' deal over British pensions


The company, part of India's largest conglomerate, reported a consolidated net loss of 11.68 billion rupees ($182 million) in the three months ended March 31, the company said. Consolidated turnover for the company during the quarter grew 30.41% to Rs 35,305 crore, compared with Rs 27,071 crore in the comparable period of the previous fiscal.

However, the revenue from India business for the company fell to Rs 17,113.13 crore during the quarter under review, while revenue from its Europe business stood at Rs 15,243.52 crore.

Indian steel companies such as Tata Steel are limping back to profitability after incurring losses for almost two years due to a sharp drop in worldwide prices amid a supply glut from China and muted demand in the domestic market.

Under a deal, announced on Tuesday, Tata will inject 550 million pounds into the British Steel Pension Scheme subject to formal approval by regulators.

As far as standalone performance is concerned (Indian operations), the company more than doubled its profits to Rs 1,415 crore compared to Rs 520 crore in Q4FY16 and Rs 1205 crore in the sequential quarter (Q3FY17).

However, unions said that a year ago, when they backed Tata Steel's turnaround plan, they were assured that members of the pension fund would be given a choice between a PPF deal or a move to a new, modified scheme.

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That is one of the issues that has still to be resolved, along with the size and shape of a new, but less generous, pension scheme that Tata has offered to set up for its 130,000 pension scheme members - pensioners and current employees.

If the negotiations for the revised pension scheme is successful, it would improve the company's funding position and pose less risk for the steelmaker's European operations.

While far from finalised, the RAA signals a landmark moment for United Kingdom defined benefit pension schemes, given the high-profile nature of the case.

As well as the Wednesfield Steelpark, Tata Steel employs around another 100 at Walsall and Brierley Hill.

A PPF spokesperson confirmed the commercial details and said members of the scheme could rely on the lifeboat fund to protect them and receive PPF levels of compensation at the minimum. "Discussions are progressing constructively and we expect to be in a position to communicate the final outcome to members soon". After the apportionment process there is plan to separate the scheme from the business, and also there is a potential for new scheme.