Liberty House Group will start due diligence within a week from Monday on the loss-making UK assets that Tata Steel has put up for sale, its boss Sanjeev Gupta said, adding he was confident of turning the business around with government help.
Tata, Britain’s biggest steel producer, has been forced to walk away from its UK business due to high costs, weak demand and a flood of supplies from top producer China. The formal sale process for the assets, which the company bought in 2007, is expected to start by Monday.
“It’s a loss-making business and a loss-making business is not worth a lot in itself to buy,” Gupta told Reuters in a phone interview on Thursday. “It’s more of a question of what are the resources required in turning it around.”
Changing the raw material for the steel plants to locally available scrap, from imported iron ore, would be the best solution as long as power costs are manageable, he said.
Indian-born Gupta, a 44-year-old Cambridge graduate who founded Liberty House in 1992, has already told the British government that competitive power prices would be critical in order to revive the business and fight competitors.
The British government opened talks with potential buyers for Tata Steel’s UK operations, including Gupta’s company Liberty House, earlier this week.
Liberty House has a turnover of around $6.5 billion and so working capital needs to buy out Tata’s UK plants should not be a big issue, Gupta said.
More clarity is expected to emerge once Gupta appoints a financial adviser, likely on Friday.
“In terms of money, what we will require is the working capital to run the businesses … and working capital we are quite good at, as that is what we have been doing in our trading business for the last 25 years,” Gupta said.
(Reuters)
[“source-Businessworld”]
