Cost Rationalisation in Europe is Credit Positive for Tata Steel - Moody's

Release time：Nov 28, 2019 From：admin

Moody's Investors Service said that Tata Steel's planned cost rationalisation programme for its wholly-owned subsidiary Tata Steel UK Holdings is credit positive for both companies because it will support a turnaround in the latter's less profitable operations that have dragged on Tata Steel's consolidated credit quality.

The European operations accounted for 35 per cent of Tata Steel's total shipments in the first half of fiscal 2020 ending March 2020 but they generated only around 2.4 per cent of its reported consolidated earnings before interest, tax, depreciation and amortisation. The programme features two key initiatives for European operations: reducing costs and improving realisations. Synergies from centralised sourcing of key raw materials and capital equipment for the European and Indian businesses and a reduction in workforce of up to 3,000 or 15 per cent of its total employees in Europe will reduce costs.