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Tata Steel will also hold consultations with staff from UK facilities to replace the existing pension plan. (Picture- Tata steelworks Port Talbot, Wales)Reuters file

Shares of private sector steel manufacturer Tata Steel surged over 3 percent in early morning trade on Thursday as the company said it would remain engaged in UK facilities for 10 years with a 1 billion pound investment commitment. At 11.10 am, shares of Tata Steel were trading 4 percent higher at Rs 428.55 at the National Stock Exchange (NSE).

According to a report on PTI, the Indian steel giant pledged to stay in Britain for 10 years as part of its talks with steelworkers' union to save thousands of jobs in UK. The Tata Group company also offered a number of guarantees to workers including a minimum 5-year commitment to keep both furnaces operational at UK's largest steel plant facility, Port Talbot Steelworks.

In an important move, the company would also start consultation with its employees next week for replacing the existing British Steel Pension Scheme, which has liabilities of over 15 billion pound.

"Tata Steel UK has developed a long-term investment plan to make the business more competitive in the future. The delivery of the transformation plan in the next couple of years, combined with a structural solution for the British Steel Pension Scheme fund, is essential to provide the affordability and financial self-sufficiency for future investments and also service its financial obligation to its stakeholders," the report quoted Koushik Chatterjee, group executive director, Tata Steel and executive director for Tata Steel's European business as saying.

According to global brokerage firm Credit Suisse, delinking pension fund would help the company merge its European assets with Germany's Thyssenkrupp. "Delinking pension fund should pave way for Thyssenkrupp joint venture, which could take 6-12 months to materialize," the brokerage firm said in a note.

Notably, Tata Steel's European operations are reeling under loses in recent years owing to weak demand for steel coupled with cheap imports from China. Though it accounts for around 60 percent of Tata Steel's revenue, losses from European facilities have pulled down the company's profitability to a large extent.