Fitch downgrades SAIL's credit profile to 'negative'

Rating agency Fitch today downgraded Steel Authority of India Ltd's (SAIL) credit profile to 'negative' from 'stable' stating subdued operating performance.
"Delays in execution of debt-funded expansion and modernisation programme, low profitability and muted demand have led to deterioration in the company's credit profile," the agency said in a statement.
The agency rated SAIL's credit profile as 'BBB-'.
"Fitch expects SAIL's performance to improve significantly over the next two years, supported by rising volumes and improving in cost efficiencies following the completion of the expansion and modernisation programme," it said.
However, the agency said that continued weak steel demand growth in India or high steel imports or a further softening in global steel prices could derail the company's efforts to deleverage.

"The agency expects SAIL's net leverage (net debt/operating EBITDA) to improve to below 3.5x by FY17," it said.

Fitch said, it hopes SAIL to play a key role in government's plan to enhance India's steel capacity to 300 million tonnes (mt) by year 2025 from around 101 mt in FY14.
SAIL is currently on an expansion mode and expects to enhance its annual capacity to 23 mt from present capacity of 13 mt.
Shares of the company today closed down by over half a per cent at Rs 72.35 on the BSE.