Fitch Ratings has today assigned a National Issuer Rating of ‘AAA(ind)’ to India-based Steel Authority of India Limited (SAIL). SAIL’s INR20,000 million Long Term Bank Loan programme, INR20,000m Long Term Fund based Bank Limits and INR50,000m Long Term Non-fund based Bank Limits have also been assigned ‘AAA(ind)’ ratings. The Outlook on the ratings is Stable.

The ratings reflect SAIL’s position as the leading steel manufacturer with an established brand, its considerably large as well as growing revenues and profits, its very strong credit metrics, its presence in almost the entire range of mild steel products, ownership of large reserves of quality iron ore, and the expected strength of the steel cycle at least in the medium term. The ratings also take into account the Indian government’s demonstrated financial support to SAIL in the past. SAIL has planned large capex for expansion and modernisation of all its steel plants. However, Fitch expects that its impact on the credit metrics will be mild due to large cash balances as well as strong cash accruals.

At financial year-end 2007 (FYE07), SAIL had cash balances amounting to INR98.1 billion. SAIL’s total adjusted debt net of cash has remained negative since FYE05. Total debt of SAIL at FYE07 was INR46.4bn, marginally up from INR46.1bn at FYE06. At FYE07, total adjusted debt was 21% of total adjusted capitalisation compared to 27% at FYE06, a consistent improvement over the last five years. The debt to equity ratio is expected to improve in the medium term despite its large capex plan.

SAIL is India’s largest steel producer with a 30% share in crude steel production. It operates five integrated steel plants, three special steel plants, one ferroalloys plant, 616 MW capacity power plants in 50:50 JVs, 9 iron ore mines, three coal mines, five limestone mines and two dolomite mines. In FY07, SAIL produced 12.60m metric ton of saleable steel compared to 12.05m metric ton in FY06.

SAIL recorded revenue of INR342.2bn in FY07, 22% up from INR281.3bn in FY06. It’s operating EBIDTAR in FY07 was INR95.5bn (FY06: INR64.5bn), whereas net income in FY07 was INR62.7bn (FY06: INR40.8bn). The revenue, EBIDT and net income of SAIL for 9M08 improved over 9M07 to INR267.3bn, INR89.2bn and INR51.6bn, respectively.

Sourced From: Sampark Public Relations Pvt Ltd

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