Tata Steel UK suitor to start due diligence in around ten days

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Source:   —  April 07, 2016, at 3:33 PM

Tata, Britain'south biggest steel producer, has been forced to walk far from its UK business due to high costs, feeble demand and a flood of supplies from top producer China.

Liberty House Grouping will start due diligence within a week from Monday on the loss-making UK assets that Tata Steel () has keep up for sale, its boss Sanjeev Gupta said, adding he was confident of turning the business around with government help.

Tata, Britain'south biggest steel producer, has been forced to walk far from its UK business due to high costs, feeble demand and a flood of supplies from top producer China. The formal sale process for the assets, which the company bought in two thousand-seventh, is expected to start by Monday.

"It'south a loss-making business and a loss-making business isn't worth a lot in itself to buy," Gupta told Reuters in a phone interview on Thursday. "It'south more of a question of what're the resources required in turning it around."

Changing the raw material for the steel plants to locally available scrap, from imported iron ore, would be the best solution as long as power costs are manageable, he said.

Indian-born Gupta, a 44-year-old Cambridge graduate who founded Liberty House in one thousand nine hundred ninety-second, has already told the British government that competitive power prices would be critical in order to revive the business and fight competitors.

The British government opened talks with potential buyers for Tata Steel'south UK operations, including Gupta'south company Liberty House, earlier this week.

Liberty House has a turnover of around $6.5 billion and so working capital needs to purchase out Tata'south UK plants shouldn't be a huge issue, Gupta said.

More clarity is expected to emerge once Gupta appoints a financial adviser, likely on Friday.

"In terms of money, what we'll require is the working capital to running the businesses ... and working capital we're quite excellent at, as that's what we've been doing in our trading business for the last twenty-five years," Gupta said.

(Reporting by Promit Mukherjee and Krishna N. Das; Editing by Himani Sarkar)

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