MUMBAI: India’s largest steelmaker Tata Steel Ltd will explore new options after competition watchdog European Commission blocked its proposed joint venture (JV) with Germany’s Thyssenkrupp on Friday.

According to the agreements between the two sides signed last June, Tata Steel Europe was to offload close to €2.2 billion of debt on its balance sheet to the combined entity. The JV would have created Europe’s second-largest steel maker after ArcelorMittal by merging the two companies’ operations in Germany, the Netherlands and the UK.

In statement on Friday, Tata Steel said that the JV was an important strategic initiative for the company to create a sustainable portfolio in Europe, which would have also helped it de-consolidate the European business and deleverage its balance sheet. “Tata Steel remains committed to the above strategy and will explore all options to achieve similar outcomes in the future," it added.

Tata Steel has undertaken significant deleveraging in the last six months and will continue to pursue the strategy through internal cash generation and asset sales, the company said.

“Over the last six months, we have engaged with the European Commission in great depth. They had expressed concerns and objections on electrical steel, automotive steel and packaging steel, and we went back with remedies which they did not feel was sufficient," said T.V. Narendran, global chief executive officer and managing director, Tata Steel. “Being responsible owners of the European business, we will also focus on ensuring that the business remains sustainable."

“The importance of the European business to Tata Steel is much smaller now than what it was in the past. Operations in the UK have improved while Netherlands is running stable, but the market in Europe is soft. We will focus on making the European businesses cash-positive this year," said Koushik Chatterjee, executive director and chief financial officer, Tata Steel.

“We now look at the way forward and possibilities. We continue to grow in India. As a proportion, India contributes to two-thirds of revenue and 90% of profit," Narendran added.

Tata Steel pared its debt by 18,000 crore in fiscal year 2019, bringing its consolidated net debt to 1 trillion.

In the March quarter results, the company said it had extended its debt maturity profile by raising 4,315 crore through 15-year non-convertible debentures and refinanced outstanding debt of Bamnipal Steel (erstwhile Bhushan Steel), which it acquired via a bankruptcy sale. Tata Steel plans to deleverage debt by $1 billion this fiscal. Company officials claim the plan remains unaffected by the failure to secure an approval for the JV with Thyssenkrupp.

Corus Group plc was acquired by Tata Steel in 2007 for $12 billion, before it was renamed Tata Steel Europe in 2010. Over the years, Tata Steel has taken a $3 billion impairment on its European steel operations.

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