Tata Steel to stop doing business with Russia

Tata says No to Russia

by 5paisa Research Team Last Updated: Apr 21, 2022, 01:23 PM IST

The pressure of Western economies and their sanctions on Russia appears to be mounting on Indian private sector companies. After Reliance and Infosys, it is not the turn of Tata Steel to adopt the line of the West.

Tata Steel has confirmed that it will stop doing business with Russia effectively immediately. This is in line with the call given by the Western world to sever business links with Russia for human rights violation in Ukraine.

Several global companies in the US and UK have already taken a decision to fully exit Russia. In India, Reliance has already decided it will not be buying Ural Crude from Russia till the war issue is resolved.

Infosys has said that it will not be conducting any operations in Russia and would be winding up its office. Now Tata Steel has also joined the chorus. Clearly, the pressure of the West appears to be showing on Indian private companies.


Check - Infosys Share Price


Pressure on Indian private sector comes at various levels. Firstly, Indian industries like IT, pharma and auto ancillaries that are largely export oriented are facing pressure from the West to cut down Russia connections.

Large PE investors and institutional investors are also insisting that the companies they are invested in should cut down Russia exposure. In addition, US and European markets are barring exposed companies from their markets.

For Tata Steel, the Russian connection is more about sourcing of raw materials for its steel plants in UK and the Netherlands. Tata Steel does not have any operations in Russia, not does it have any employees based out of Russia.
 

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However, it does source steel inputs from Russia, including coal. Considering the rising pressure of Western nations building up, even Tata Steel has decided to look for alternate sources of inputs, than depending on Russia.

Over the last few weeks, the sanctions on Russia have intensified after the rampant human rights violations came to light and the rising civilian casualties. Also, there is a humanitarian crisis created in Ukraine with millions of people displaced, either temporarily or permanently.

The West has been adding pressure, but while the Indian government has been steadfast in its support to Russia, private companies have other commitments too.
 

Also Check - Tata Steel Share Price


For quite some time now, the Western nations have been calling upon India to speak up against the human rights violations in Ukraine caused by the Russian war. However, India has remained silent due to its deep defence relationships.

However, for private companies, this impacts, their credit lines, their access to banking facilities, access to international markets, ability to attract global investors and fund managers etc. That is a huge price.

While the EU continues to import oil from Russia, it is expected to get stricter. Going ahead, Russian oil will be sourced only in the extreme event of enabling energy security and not for regular and routine use.

Tata, with its deep presence in Europe, would not want to go against the EU diktats. It now remains to be seen how the Indian government reacts to these developments and whether it would go by the letter of the rules or by the spirit.

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