Tatas Working Out Ttl Stake Sale With Timken

Private sector steel major Tata Steel has announced that it is open to divesting its entire stake in Tata Timken Ltd (TTL), a joint venture with Timken Company of the US. The two partners are understood to be working out a negotiated pricing mechanism to facilitate the transfer of shares.

Speaking to reporters in Jamshedpur yesterday, Tata Steel managing director, J J Irani, said following a recent meeting, the Tata Steel board has entrusted its directors in TTL to arrive at the most equitable solution with regard to the divestment and Tata Steel is willing to divest its entire stake.

 

There is also a possibility that with the divestment of the Tata Steel stake in TTL, the name of the company would also change to synergise it with Timken Company's global corporate identity. Negotiations in this regard are also on at present.

Also speaking at a press conference in Jamshedpur yesterday, J T Elsasser, group vice-president, Timken USA, said Timken Company would ideally be looking at a majority holding of 51 per cent in TTL. The US-based company would have to pump in around $25.3 million to acquire Tata Steel's entire 40 per cent stake. The TTL share price is at present quoting at Rs 40.

However, Irani was emphatic that Tata Steel would not remain as a minority shareholder in Tata Timken Ltd.

According to the present shareholding pattern of Tata Timken Ltd, the $2.8 Timken Company, USA, has a 40 per cent shareholding while Tata Steel has 40 per cent. The remaining is held by the public. Elaborating on the reason for getting out of Tata Timken, Irani said, "The muscle of TTL is high technology and since ball bearings is not a core competency area with Tata Steel, it made sense to get out of the business. The future of Tata Timken lies with its parent, Timken Company, USA".

Tata Steel, he added, would remain the primary supplier of steel to TTL and the Tata companies like Telco would continue to be the biggest customers of TTL.

Tata Timken Ltd is the first joint venture entered into by the Timken Company. The company has always operated through 100 per cent subsidiaries in markets outside the USA. However, an exception was made in the case of India due to the nature of the market here, said Elsasser.

However, he added, the joint venture of India had opened up a new avenue of growth for Timken and this joint venture had been followed by two more in China and Romania.