Tata Steel Ltd. is in talks with Swedish steelmaker SSAB AB to sell its Netherlands unit and reduce the burden from its cash-draining European operations. The company started discussions with SSAB for the potential acquisition of Tata Steel Netherlands including the Ijmuiden steelworks, it said in a media statement announcing the quarterly earnings. “Based on the discussions, initiated by SSAB regarding a potential acquisition of Tata Steel’s Netherlands business, we will undertake a due process and move to the next stages including consultation and due diligence,” Executive Director and Chief Financial Officer Koushik Chatterjee was quoted as saying in the statement.

To that effect, Tata Steel will first look to hive off Tata Steel Netherlands from Tata Steel U.K. and pursue separate strategic paths for both, it said. “The company is committed to deploy proceeds of any strategic restructuring towards additional deleveraging of the balance sheet.

Tata Steel has been looking for a solution for its European business since being hit by the 2016 commodity crisis, though a number of its troubles stem from before then. Even now, when its India business is recovering, losses at the European subdiaries continue to drag its earnings. During the post-earnings conference call, when billionaire investor Rakesh Jhunjhunwala asked why the company was not considering closure of its cash-burning U.K. business, Managing Director and Chief Executive Officer TV Narendran said there is a huge cost involved. The company, he said, doesn’t see roadblocks for the Netherland deal like it faced in failed merger of European unit with Thyssenkrupp AG and geographies don’t overlap substantially.

Steelmakers in Europe have been under pressure to consolidate, affected by weaker demand, global overcapacity and increasing prices of iron ore. Last year, a seeming agreement between Tata Steel and Thyssenkrupp AG for the European unit collapsed due to regulatory concerns. Shake-Up At Indian Subsidiaries The Tata Group firm also said that it will reorganise its India business and simplify the group structure by clubbing listed and unlisted subsidiaries into four clusters. The business clusters will be long products, downstream, mining, and utilities and infrastructure, it said in the statement. The boards of its respective subsidiaries, today, approved a merger of the listed Tata Metaliks Ltd. and the unslited Indian Steel and Wire Products into the listed Tata Long Products Ltd. The

proposed consolidation, subject to regulatory approvals, is expected to complete in the next 6-9 months, it said. “We’re now embarking on reorganising our Indian subsidiaries into four verticals to drive scale, synergies and simplification which we are confident will create value for our stakeholders,” Chief Executive Officer and Managing Director TV Narendran said in the statement.

The move comes soon after Tata Steel reported a strong quarterly performance by its Indian unit. With steel mills firing on all cylinders since the lockdown, the Tata Group firm reported a 22% rise in domestic sales volumes to 5.3 million tonne—it’s highest ever quarterly figure. Better realisation, lower coal prices and relatively fewer exports helped Tata Steel improve its operational profit.