Tata Steel Ltd, India’s largest steel company by revenues, is no longer in talks with Switzerland-based Klesch Group for the sale of its European long products business and associated distribution facilities, according to a stock market disclosure.

The company, however, did not give any reason for the pull-out. But Gary Klesch, the billionaire promoter of Klesch Group, had said early this week that talks did not progress as the UK government failed to address the issue of cheap imports from China and a rise in energy costs to run the plants.

Tata Steel and Klesch Group had signed a memorandum of understanding for the sale of its European long products business last October and the deal was expected to be completed in the first half of 2015.

The deal included the sale of UK-based assets including Tata Steel's Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, besides other operations in France and Germany.

Meanwhile, Tata Steel has hived off the long products business, with the associated distribution facilities, as a separate wholly-owned subsidiary of Tata Steel UK Ltd.

“With the hive down of the long products into a wholly-owned subsidiary, the new structure will enable the company to evaluate and execute strategic options in the future,” Tata Steel said.

The firm's long products business in the continent comprises a wide range of standard and differentiated products including sections, rails, wire rods, special profiles and plates for the rail, yellow goods, energy and construction sectors.

It employs around 6,500 people of the total 30,500 people working for Tata Steel in Europe and currently produces around 3 million tonnes with the capacity to produce up to 5 million tonnes, annually.

Tata Steel catapulted to become the fifth-largest steel producer with large operations in Europe when it acquired UK's Corus for over $12 billion in 2007, in what remains to date the biggest overseas acquisition by an Indian company. However, as the global economy went into a tailspin with the financial crisis it had become an albatross around the neck of the Indian steel firm.

Tata Steel has invested £1.2 billion in its UK operations and trained 1,200 UK apprentices and graduates since acquiring Corus.

Founded in 1990, Geneva-headquartered The Klesch Group is a global industrial commodities business, with three divisions specialising in the production and trading of chemicals, metals and oil. The firm has revenues in excess of €5 billion, and employs more than 2,000 people across 30 locations in over 17 countries around the world.

Shares of Tata Steel were trading at Rs 261.15 a share, down 0.04 per cent on the BSE at 11:40 AM in a flat Mumbai market on Thursday.

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