Tata Steel had been trying to sell off its European steel manufacturing operations to a joint venture of ThyssenKrupp and the Tatas. This would have given the Tatas an exit from the European steel business and allowed them to concentrate on the Indian steel business. India is the fastest growing market for steel so now Tatas want to focus more on the Indian market. The ThyssenKrupp joint venture plan is not taking off and that was confirmed today. That was largely because the European Commission was against this move as it expected more remedies and concessions from the two JV partners.

Tata Steel has said that they would not been able to offer any more remedies and concessions as it would impact the viability of their business. As a result, it currently looks like the EC will not approve the joint venture. The JV, had it gone through, would have enabled Tata Steel to substantially reduce its leverage and also reallocate the resources to its India business. Since that may take some more time till Tata Steel finds alternatives, the stock corrected sharply.