In the second instance of its kind in the Tata group, Tata Iron & Steel Company proposes to write off its debit balance of Rs 1,550 crore (Rs 15.5 billion) as a part of the overall restructuring plan.
Earlier, Tata Engineering too had written off Rs 1,180 crore (Rs 11.8 billion). This is one of the largest write offs in Indian corporate history.
The Tata Steel board at its meeting held on Thursday approved a proposal to adjust the debit balance of Rs 1,550 crore miscellaneous expenditure account, which has been not written off or adjusted as at December 31, 2002, and accretions/variation thereto between January 2003 and March 2003, the company has said in a notice to the Bombay Stock Exchange.
The write off of miscellaneous expenditure not exceeding Rs 1550 crore will be made against the balance standing to the credit of the capital redemption reserve account and securities premium account of the company as at March 31, 2002.
The company has capital redemption reserve of Rs 150 crore (Rs 1.5 billion) and share premium of Rs 1,763 crore (Rs 17.63 billion) as on March 31, 2002.
Commenting on the write off, R C Nandrajog, vice president (finance), Tata Steel said, "The provision is being made in lieu of an early separation scheme. Instead of making provisions on a year to year basis, we have decided to make a one time provision. After the write off, our profits for 2003-04 will be much better."
The proposal, however, is subject to the approval and confirmation of the shareholders and the Bombay high court and other regulatory authorities.
