Tata Steel Group’s plan to cut overseas exposure is taking longer than expected.

Months after Germany’s Thyssenkrupp walked out from a planned joint venture for the European business, China’s HBIS Group dumped a deal to take a majority stake in its South East Asian operation.

In a communication to the bourses, Tata Steel said the deal with HBIS is scrapped and it has again started the process to look for a new partner.

“We have been informed by HBIS that they have not been able to procure the requisite approvals from the Hebei government, one of the key conditions for the proposed transaction. Both parties have, therefore, decided not to extend the definitive agreements,” Tata Steel said.

According to the agreement, signed on January this year, a step down subsidiary of Tata Steel was going to divest its equity stake in Tata Steel (Thailand) Public Company and NatSteel Holdings to a company where 70 per cent stake was to be held by HBIS and the balance 30 per cent by Tata Steel.

The deal was expected to reduce the debt of Tata Steel Group by close to Rs 4,000 crore. Put together, the SE business clocked a revenue of Rs 9,542 crore, representing 7.2 per cent of total revenues.

While NatSteel Holdings reported a profit after tax of Rs 52 crore in 2017-18, Tata Steel Thailand reported Rs 89 crore profit. Put together, they contributed 3.38 per cent of group profit of 2017-18.

The rational of the TK and HBIS deals were to deconsolidate the balance sheet from overseas business and expand rapidly in India, where the company runs a vertically integrated operation due to ownership on iron ore.

“Tata Steel will immediately begin engagement with other investors in continuation of its strategy to find a partner for the South-East Asian business,” the statement to the exchange said.