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Tata Steel lends further support to ailing equipment maker TRF

Steel News - Published on Mon, 25 Feb 2019

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DNA India reported that TATA Steel has decided to continue supporting its ailing group outfit, TRF Ltd, maker of earthmoving vehicles and construction equipment. With infrastructure and construction sector reeling under sustained slowdown, listed entity TRF's losses continue to pile up. This has forced Tata Steel to infuse an additional INR 250 crore in the form of preference shares into its arm. This is over and above the assistance in the form of related party transactions worth around INR 255 crore committed for the ongoing financial year as the company continues to explore ways to increase business and assistance from the promoter entity. TRF's losses widened from INR 18.54 crore in the September quarter to INR 24.50 crore in the October-December period.

With accumulated losses touching INR 406 crore, the company's net worth has been fully eroded. Its receivables have been impacted as some of the major over-leveraged companies in the infrastructure, power generation and steel sector have been referred to the National Company Law Tribunal under Insolvency and Bankruptcy Code.

TRF, in which Tata Steel holds a 34.11% stake, has been selling off some of its overseas ventures that were set up when the market conditions were favouarble.

During the December quarter, it sold off its step down subsidiary Dutch Lanka Trailers LLC, based in Oman, at book value that resulted in a loss of INR 63 lakh.

Earlier this year, TRF Singapore Pte sold the shares of its arm York Transport Equipment Pte and its subsidiaries for a total consideration of INR 291 crore to SAF Holland. As a result, TRF Singapore took a hit of INR 83 crore in the value of the investments as its capital base was subsequently reduced.

TRF disclosed in its December earnings details that "The company expects to generate cash flow from improvements in operations, increased business and assistance from the promoter entity currently under discussion, proceeds from restructuring of its subsidiaries.”

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Posted By : Rabi Wangkhem on Mon, 25 Feb 2019
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