Tata Steel, Thyssenkrupp will not spin off joint venture in next 2-3 years

Tata Steel and Thyssenkrupp have no plans to spin off their pending European steel joint venture within the next two to three years, Tata`s managing director said on Monday.

The two companies announced last month a preliminary agreement to merge their European steel operations, creating the continent`s second-largest steelmaker after ArcelorMittal, with revenues of 15 billion euros ($18 billion).

Markets widely expect the longer-term aim of the merger is an initial public offering that would give the two companies a way to exit the volatile European steel business, but Tata Steel ruled that out in the near term.

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"Definitely no IPO in the next two to three years," T.V. Narendran, Tata`s managing director for India and South East Asia, told Reuters at the World Steel Association general assembly in Brussels.

The memorandum of understanding the two companies signed has a lock-in period much longer than that, Narendran said.

In India, where Tata plans to double capacity by 2022 to meet demand in one of the world`s fastest-growing steel markets, Narendran said capacity at Tata`s Kalinganagar plant was likely to expand to 5 million tonnes, not 3 million.

Tata`s board is due to decide on the matter within the next two to three months.

Narendran added that none of Tata`s capacity expansions in India will involve an increase in the group`s leverage, because the company has strong earnings and can spread the costs out over several years.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)