Tata Steel has revealed it lost almost £200m on the sale of its Scunthorpe-based long products business for a nominal £1.
The sale of the beleaguered unit back in May 2016 to turnaround investor Greybull Capital made a significant dent on the company's profits, according to annual accounts filed at Companies House for Tata Steel UK.
Greybull, which specialises in taking on struggling businesses, renamed the long products division British Steel and took on around 4,800 of Tata's workers. The business was purchased for a nominal fee of £1 as Tata's UK division restructured to focus on higher-margin products as it dealt with ongoing losses.
The UK's steel industry has faced challenges over recent years as it competes with cheaper international competition and demand declines.
However, in January, seven months after the deal, British Steel said it was back in profit for the first time since its acquisition from Greybull. Executives at Tata told the Sunday Telegraph they were privately "furious" at what they saw as British Steel claiming the benefits of their hard work to get the business back in profit.
For the financial year to the end of March, Tata Steel UK reported a pre-tax loss of £471m after exceptional items compared with a loss before tax of £468m the previous year. The loss related to the disposal of the long products division was £198m.
Revenue, however, increased one per cent to £1.99bn, due to an increase in global steel prices which was offset by a 15 per cent decrease in steel deliveries as a result of Tata focusing on higher margin business.