A Tata Steel Europe spokesperson said that it "remains an ongoing concern and constructive talks are on with the UK government on areas of potential support"
Auditors of Tata Steel Europe said they are doubtful about the company's ability to raise sufficient capital in the near term and continue as a going concern.
"Without qualifying our opinion on the special purpose financial information, we have considered the adequacy of the disclosure made in the special purpose financial information concerning Tata Steel Europe’s ability to continue as a going concern,” the auditors said, as quoted by The Economic Times.
Moneycontrol could not independently verify the story.
A Tata Steel Europe spokesperson told the paper that it "remains an ongoing concern and constructive talks are on with the UK government on areas of potential support. As these discussions have not reached a conclusion, it would be premature to comment on any options that may or may not be under consideration.”
In Tata Steel’s Integrated Report and Annual Accounts 2019-20, the auditors cited a letter received by Tata Steel Europe, the report said.
Tata Steel Europe received a letter from TS Global Procurement Company (Tata Steel) undertaking "to provide working capital up to a specified amount," which is higher than the forecast required by Tata Steel Europe over the next 12 months.
But the letter from TS Global stated that "it represents present policy, is given by way of comfort only and is not to be construed as constituting a promise as its future funding plans."
Due to this uncertainty, and other information in the "special purpose financial information" section of the annual accounts, the auditors raised doubts about the company's ability to continue as a going concern.
"Clearly, Tata Steel is trying to limit support only to the extent they believe the current shortfall may require, but is not giving an open cheque for all future adverse possibilities," an official told the publication.