BRUSSELS - 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.
"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.