Tata Steel loses its sheen

Tata Steel is down in the red today morning. The stock opened almost Rs.8 lower at Rs.357 and went down to Rs.355 and now hovers around Rs.358 levels, down some 2%. The mood on the counter looks pretty bearish.

The stock is reacting to its impairment review for Fy15. It has stated that the company expects to recognize a non-cash write-down of the goodwill and assets in the consolidated financial results in Q4FY15 of approximately Rs. 5,000 crore, mainly relating to the Long Products UK business in Tata Steel Europe which will now be fully impaired.

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, the Company undertook a non-cash impairment charge of Rs. 1,577 cores in Q1FY15 towards its investment in the Mozambique Coal Project. The total impairment charge for FY15 is expected to be around Rs.6500 crore and this is naturally expected to affect the company’s performance.