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Tata Steel may decline on taking $1.6 billion impairment charge

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Last Updated : May 14 2013 | 10:05 AM IST

Tata Steel said after market hours on Monday, 13 May 2013, that the company has substantially completed its year end impairment review for the consolidated financial statements for the financial year end 31 March 2013 (FY 2013) as required under the Indian Accounting Standards. This review was undertaken taking into account the external economic environment and macroeconomic conditions especially in Europe, the underlying demand-supply imbalance of the global steel industry and the prudent view of the forecast of the businesses. Following the review, the company expects non-cash write down of the goodwill and assets in the consolidated financial statements for the year ended 31 March 2013 of around $1.6 billion.

The impairment is primarily due to a weaker macroeconomic and market environment in Europe where apparent steel demand has fallen significantly in 2012-13 by almost 8% which in aggregate results in almost 30% since the emergence of the global financial crisis in 2007. This has led to a downward revision of cash flow expectations underlying the valuation of the European business. The impairment also includes the effect of write down of assets in the ferro chrome business in South Africa and the mini blast furnace in Tata Steel Thailand which has been impacted by the high cost of raw material feedstock. The final figures will be included in the full year results on 23 May 2013, Tata Steel said. The company's financial covenants are unaffected by the above non-cash write down of goodwill and assets, it added.

DLF's proposed issue of shares to eligible qualified institutional buyers opens and closes today, 14 May 2013. The company would offer upto 8.1 crore shares in price band of Rs 222 to Rs 233 per share. The floor price for the share sale is set at Rs 222 per equity share.

Ranbaxy Laboratories said after market hours on Monday, 13 May 2013, that a previously disclosed investigation by the US Department of Justice (DOJ) of data integrity and manufacturing processes at certain Ranbaxy facilities in India has been concluded. The investigation related to conduct which occurred several years ago, and Ranbaxy's current management team fully cooperated with the DOJ, Ranbaxy said. On 20 December 2011, Ranbaxy announced that it had signed a consent decree with the US Food and Drug Administration (USFDA), under which Ranbaxy had committed to further strengthen procedures and policies to ensure data integrity and to comply with Current Good Manufacturing Practice (cGMP). In anticipation of the settlement agreement with the DOJ, Ranbaxy had announced at that time its intention to make a financial provision of $500 million related to expected costs associated with resolving the DOJ investigation.

Under the terms of the final settlement agreement, Ranbaxy and its affiliates have agreed to settle alleged civil violations of the False Claims Act with the US, all 50 states and the District of Columbia. Separately, a US subsidiary, Ranbaxy USA, Inc., has agreed to plead guilty to a criminal information charging violations of the Food, Drug and Cosmetic Act and other criminal statutes. Ranbaxy's payments related to both the civil and criminal settlements total $500 million in aggregate. The financial provision Ranbaxy established in December 2011 will be sufficient to cover all material financial obligations under the agreement, Ranbaxy said.

Mr. Arun Sawhney, CEO & Managing Director, Ranbaxy, stated, "Today's announcement marks the resolution of this past issue. We are pleased to continue bringing safe, effective and quality medicines to market for the benefit of consumers in the US and other parts of the world. While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy's stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance. Ranbaxy has successfully launched several generic products recently and is well-positioned for future growth in the US and around the world with a robust pipeline of important products as it continues to build a strong global portfolio of branded and generic prescription and OTC pharmaceuticals. Our conduct is guided by our philosophy of 'Quality and Patients First'."

Dr Reddy's Laboratories and Reliance Infrastructure unveil Q4 results today, 14 May 2013.

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First Published: May 14 2013 | 8:56 AM IST

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