Tata Steel Falls on Rs 6,500 Crore Impairment Charge

Shares of Tata Steel fell nearly 3 per cent to hit intraday low of Rs 355.55 after the company on Thursday post the market hours informed Bombay Stock Exchange that it will  take a non-cash impairment charge of Rs 6,500 crore in quarter ended March 2015.

Tata Steel's writedown comes from its business operations in the United Kingdom and is related to its long products. The impairment also includes a write down of investments in overseas raw materials projects in Mozambique, Ivory Coast and Taconite project in Canada because the economic viability of these projects remains uncertain at the current level of commodity prices.

Additionally, Tata Steel undertook a non cash impairment charge of Rs 1,577 cores in the first quarter of the FY 2014-15 towards its investment in the Mozambique Coal Project. The total impairment charge for the FY 2014-15 would be around Rs. 6,500 crores in the consolidated financial results.

The details of the impairments will be included in the audited financial results on 20th May 2015. However, Tata Steel's liquidity position or financial covenants are unaffected by the above non-cash write down.

The shares of Tata Steel ended 0.6 per cent lower at Rs 364.