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Tata Steel to write down over Rs 8,700 crore of goodwill, assets


New Delhi:

Tata Steel expects a non-cash write-down of goodwill and assets of around $1.6 billion (Rs 8,787 crore with respect to $1=Rs 54.92) due to poor macroeconomic condition in Europe, among others, it said in a statement on Monday.

"...the company expects non-cash write down of the goodwill and assets in the consolidated financial statements for the year ended March 31, 2013 of around $1.6 billion," it said.

The impairment, it said, is primarily due to a weaker macroeconomic and market environment in Europe where apparent steel demand has fallen significantly in 2012-13 by almost 8 per cent "which in aggregate results in almost 30 per cent since the emergence of the global financial crisis in 2007".

"The above underlying condition is expected to continue over the near and medium term, and has led to the downward revision of cash flow expectations underlying the valuation of the European business," it said.

"The impairment also includes the effect of write down of assets in the ferro chrome business in South Africa and the mini blast furnace in Tata Steel Thailand which has been impacted by the high cost of raw material feedstock," it added.

The company, which is scheduled to announce its financial results for the year on May 23, however, said the non-cash write down is not expected to affect its financial covenants.

Financial covenants are part of the conditions of a loan agreement, these covenants are the promises by the management of the borrowing firm to adhere to certain limits in the firm's operations.

Tata Steel Group is among the top ten global steel companies with an annual crude steel capacity of over 26.5 million tonnes per annum (mtpa). It has operations in 26 countries.

The Tata Steel Group, with a turnover of $26.13 billion in FY12, has over 80,000 employees across five continents.

Story first published on: May 13, 2013 21:53 (IST)

Tags: Non-cash impairment charge, Tata Steel, Tata Steel Group




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