Auditors flag ‘material uncertainty’ of Tata Steel Europe
The auditors of Tata Steel have raised concerns regarding the ‘material uncertainty’ of its European arm due to the Covid-19 pandemic’s severe impact on its financials.
During the January-March quarter, Tata Steel Europe, however, reported nearly Rs 65 crore operating profit.
The auditors, in their notes for the fourth quarter earnings, said Tata Steel Europe (TSE), a wholly-owned subsidiary of Tata Steel, had assessed the potential impact of the downturn in steel demand due to the Covid-19 pandemic on its future business outlook.
As the severity and length of the downturn in steel demand on account of the pandemic remained unpredictable, the TSE directors said, “there exists a material uncertainty surrounding the impact of the Covid-19 pandemic on its financial situation”.
According to the directors, there is a reasonable expectation that TSE has the adequate resources to continue operating for the foreseeable future and the going concern basis for the preparation of its financial statements remained appropriate.
The ability to continue as a going concern of the company depended on the outcome of measures taken as stated therein and the availability of future funding requirements, which could have a consequential impact on amount of investment of Rs 20,854.89 crore in Tata Steel Holdings as on March 31, 2020, the auditors said.
On Monday, Tata Steel reported a consolidated net loss of Rs 1,095.68 crore for the January-March quarter of 2019-20. The company had reported a consolidated net profit of Rs 2,430.92 crore for the same period of FY19.