Tisco May Exit Bearings Business

Tata Steel is planning to put another non-core business, the bearings division, on the block. The board is expected to take a final decision on this soon.

Earlier, the steel major sold its cements division to the French multinational, Lafarge. The move is seen as part of Tisco's restructuring plans aimed at focusing on its core business of steel making.

Once the decision is formally taken, it will mark the Tata group's complete exit from the bearings business. In 1998, Tisco sold its 40 per cent stake in its tapered roller bearings subsidiary, Tata Timken, to its US-based partner, Timken.

Senior company officials said Tisco management had, for some time, been debating on the future of the bearings division which incurred losses for the last couple of years.

However, the division has finally turned around and is expected to make a positive contribution to Tisco's bottomline in 1999-2000. This may act as a sweetener once the division is put up for sale.

The decision on the sale of the cement division was also finalised only after it began to make positive contributions to the company's coffers.

Stressing that the division would not be put up for distress sale, a company official said, "We have two primary concerns: whether it adds to shareholder value, and whether the interests of the workers are protected".

The bearings division has a capacity to produce 35 million units, including alloy steels ball bearings, but produced around 26 million in 1998-99.

Analysts feel that the current downtrend in the industry may pull down its valuation if put on the block immediately. However, they expect a turnaround in the user industries by the end of this calender year.

Tata Steel, however, is unlikely to put the other non-core business _its tubes division-_up for sale. "One reason for not selling it is the huge real estate assets that the division has, which could be used in future for any further expansion of the integrated steel complex in Jamshedpur," the company official said. The company has already shut down its seamless tubes unit in 1998 which was part of the tubes division.

Over the last 10 years, Tata Steel has expanded its operations in the complex, the last being the 1.2 million tonne cold rolling mill, which has not left room for any futher expansion within the complex premises.