Tata Steel to take Rs 6,500 cr non-cash writedown in Q4

Tata Steel has said it expects to take a non-cash writedown of about Rs 6,500 crore ($785.3 million) in the quarter ended March 31, chiefly relating to its loss-making long products business in the United Kingdom.

Tata Steel entered Europe through its $13 billion acquisition of Corus, formerly British Steel, just before the financial crisis.

The company, Europe's second-largest steelmaker, has been forced to slash costs and jobs following its 2007 entry into the continent, where steel demand has languished since the financial crisis and clients have turned to cheaper Chinese imports.

The company said last year it was in talks to sell its long products division, including mills in northern England and Scotland to Geneva-based Klesch Group.

The impairment also includes a writedown of investments in overseas raw materials projects in Mozambique, Ivory Coast and a taconite project in Canada because of low commodity prices, Tata Steel said.

The company's profitability has been hit in recent quarters after a slowdown in China and a devaluation of the Russian rouble led to a surge of cheaper steel products entering international markets, pressuring steel prices and squeezing margins.

The Mumbai-based company's domestic production has also been hit by a raw material shortage following a string of mining stoppages, causing its plants to operate below capacity.

Tata Steel's liquidity position or financial covenants will not be affected and the total impairment charge for the year ended March 31 would be around $1.02 billion, the company said.

Tata Steel reports fourth quarter and full year results on May 20.

(Reuters)