LONDON: Tata Steel Ltd. slumped in Mumbai after India’s largest producer of the alloy wrote off its long-products business in the U.K.
The shares fell as much as 3.1 percent to 355.10 rupees and traded at 359 rupees as of 9:37 a.m. local time. The stock has declined 10 percent this year, compared with a 0.7 percent drop in the benchmark S&P BSE Sensitive Index.
The Mumbai-based company expects to take a non-cash impairment of 50 billion rupees ($787 million) for the quarter ended March 31, according to a statement Thursday. That would completely write off the value of the U.K. long-products business, which Tata Steel is trying to sell to Geneva-based Klesch Group.
“Steel prices have dropped in Europe and the outlook isn’t too positive, which could have prompted Tata Steel to write off the long-products business in the U.K.,” said Goutam Chakraborty, an analyst at brokerage Emkay Global Financial Services Ltd. “This could help take forward their discussions with Klesch.”
The impairment is the third in as many years for Tata Steel, which has been attempting to pare its liabilities after it took on about $13 billion of debt to buy Corus Group Plc more than seven years ago. Tata Steel joins Vedanta Ltd., a resource company owned by billionaire Anil Agarwal, which took a $3 billion writedown after crude’s crash eroded the goodwill value of producer Cairn India Ltd.
