LONDON: Tata Sons interim chairman Ratan Tata was today hailed as the saviour of the UK steel industry after the Tata Group announced a 10-year commitment of one billion pounds investement to save thousands of jobs for its embattled steelworks in the country last week.
In a special feature titled 'Man of Steel', the Sunday Times attributes the thousands of jobs saved in the industry largely to the sacking of Cyrus Mistry and Ratan Tata stepping in as interim chairman.
"Last week's abrupt change of heart owes much to a terse board meeting in Mumbai on October 24. At that meeting the board of Tata Sons, the parent company that sits astride an empire spanning steel to tea, sacked its chairman Cyrus Mistry and reinstated his predecessor Ratan Tata," the report said.
Describing Ratan Tata as the "architect" of the 6.1-billion-pound acquisition of Corus in 2007, it quotes insiders as saying that the 78-year-old tycoon was never comfortable with the idea of abandoning Tata SteelBSE -0.37 %'s Welsh plant at Port Talbot - the UK's largest steelworks.
"Now he is back at the helm, Port Talbot has won a reprieve," it notes.
Tata is said to have been painfully aware that the closure of Port Talbot would devastate the town already marred by poverty.
"As the head of the (Tata company) charity, Ratan is not like that. You don't want to get rid of vast chunks of people and create mass unemployment. Ratan was quite upset at the way he (Mistry) was dealing with Tata Steel. There were all these whispers that he (Ratan) did the wrong thing in buying Corus," the newspaper quotes an insider as saying.
Nearly 11,000 British workers at Tata Steel have been rejoicing after the company has indicated that it would not take any dividends from its British plants until their profit tops 200 million pounds a year.
The company made the pledge last week as part of a plan that will keep the Port Talbot site in south Wales open until at least 2021. It promised no job cuts for five years and to pump 1 billion pounds into its UK plants over 10 years.
Tata said in a statement, "The immediate target of 200 million pounds provides sufficient funds to invest in the business and to manage working capital needs. However, beyond this level the business will balance the needs of all its stakeholders, including the financing of dividends".
In return, workers must accept the closure of the British Steel Pension Scheme to future accruals.
Roy Rickhuss, secretary general of the steel union community, said, "Since March, the way people have been treated has been very hard. No one knew if they would have a job by Christmas. But we have to recognise that prior to March, Tata had invested significantly in the UK".
"This proposal would secure jobs for years to come and bring serious investment, not just to Port Talbot but steelworks across the UK," he said.
Meanwhile, the Brexit referendum in June has changed economics for Tata Steel.
Britain's vote to leave the EU, and the accompanying crash in sterling, have transformed the competitiveness of its UK operation. About 40 per cent of the output from British plants is exported.
Thanks to the cheaper pound, a business that was losing a million pounds a day just a few months ago is now back in the black.