TRF and its group firms have incurred recurring losses and has accumulated losses of Rs 211.93 crore as at 31 March, 2016
With construction and equipment sector reeling under slowdown, auditors have raised doubts over the financial health of Tata Group company TRF Ltd and its subsidiaries.
TRF Ltd, in which Tata Steel holds 34.12% promoter's stake, has reported accumulated losses of Rs 174 crore, and consolidating its subsidiaries and JVs, the losses have touched Rs 211 crore, forcing the auditors to question the future of the company.
"The group has incurred recurring losses and has accumulated losses of Rs 211.93 crore as on 31 March, 2016. The group, continuing as going concern, is dependent on the group's ability to successfully complete existing contracts and generate cash flows from operations including realisation of retention receivable to be able to meet its obligations as and when they arise," Deloitte Haskins & Sells has said in its audit note.
The TRF group includes TRF Ltd, its five subsidiaries and one jointly controlled entity.
In response to the observations of the auditors, TRF said it expects to generate cash flows from liquidating retention money relating to contracts that are in advanced stage of completion and expected dividend remittances from its wholly owned subsidiaries, which, the company claimed, will be sufficient to meet future obligations.
As per the audit note, retention money receivable aggregated to Rs 255 crore as on March, 2016, which is receivable on the completion of the performance guarantee tests.
Auditors have also expressed concern over the reasonableness of the assumptions made to estimate the future cash flow projections of subsidiary Dutch Lanka Trailer Manufacturers Ltd.
"Sales revenue projected by Dutch Lanka Trailer for the next five years are achievable considering improvement in market conditions in port and road trailers segment. Further, Tata International DLT Pvt Ltd, a 50%-50% JV, has been performing well and has shown 26% growth in FY16 in terms of numbers of trailers sold. Considering the improved sentiment in the trailers market in India, this improved performance will continue in coming years also," the company said in response to the audit comment.
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 "TRF and its group firms have incurred recurring losses and has accumulated losses of Rs 211.93 crore as at 31 March, 2016")
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