Tata Steel offers to pump £550m into closed pension fund

Tata Steel offers to pump £550m into closed pension fund

Tata Steel offers to pump £550m into closed pension fund

Tata Steel on Tuesday reported that it narrowed its consolidated loss to Rs 1,168 crore in the quarter ended March 31, 2017 as compared to Rs 3,042 crore of loss in the same period past year.

The strong fourth quarter helped the business generate earnings of £526 million for the last 12 months, compared to a £52 million loss the year before, with stronger market conditions and tailwinds from the fall in the value of sterling, which makes British exports cheaper overseas.

The company's consolidated net sales rose 29.6% to Rs 33424.09 crore in Q4 March 2017 over Q4 March 2016.

Consolidated revenue for the quarter increased by 30 percent from a year earlier to 350.05bn rupees.

This could potentially pave the way for a merger of Tata Steel UK with ThyssenKrupp or other steelmakers, which Tata Steel has always been exploring to cut losses in an oversupplied steel market, the Mint report added.

Also, Tata Steel said on Tuesday that key commercial terms of a deal to spin off its giant United Kingdom pension scheme into a standalone entity and end its liabilities for the scheme have been agreed with the scheme's trustees.

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Unions reacted cautiously to the announcement by the Indian-owned company that it would pump £550m into the British Steel pension scheme - one of the UK's largest, with liabilities of £15bn and 130,000 members, including former employees from the days when it was part of a state-owned company. The company said its consolidated Ebitda/MT rose by 194% to Rs 10,228.

"All employees in the United Kingdom can now opt into a defined contribution scheme".

BSPS Trustee Chairman, Allan Johnston, said:I am pleased that agreement in principle has been reached with TSUK [Tata Steel UK] about sponsorship of a modified pension scheme subject to qualifying conditions.

The former British Steel scheme was shut at the end of March as part of Tata's plan to avoid going bust.

The three trade unions at Tata Steel UK - Community, Unite and the GMB - said the suggested deal was a "stepping stone" to rescuing some of their members' benefits in a new, albeit less generous, scheme. "Following the above, we. are hopeful of reaching a final agreement shortly". Regarding the impending pension scheme in the United Kingdom, the company said it will reach a final agreement shortly.

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.

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