Tata Steel Writes Down Assets Due to Weakness in Europe
05/14/2013 - Tata Steel expects non-cash write down of the goodwill and assets in the consolidated financial statements for the year ended 31 March 2013 of around US$1.6 billion due primarily to weakness in Europe.
Tata Steel has substantially completed its year end impairment review for the consolidated financial statements for the financial year end 31 March 2013, as required under the Indian Accounting Standards. The above review was undertaken taking into account the external economic environment and macroeconomic conditions especially in Europe, the underlying demand-supply imbalance of the global steel industry and the prudent view of the forecast of the businesses. Based on the above, the company expects non-cash write down of the goodwill and assets in the consolidated financial statements for the year ended 31 March 2013 of around US$1.6 billion.
The impairment 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% which in aggregate results in almost 30% 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. The impairment also includes the effect of write down of assets in the ferrochrome 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.
