Fitch withdraws SAIL's rating

Fitch today said it has withdrawn rating Steel Authority of India Ltd for commercial reasons and will no longer provide ratings or analytical coverage on it.
Fitch had earlier downgraded SAIL's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB'.
"SAIL's outlook is negative. The downgrade follows the deterioration in SAIL's financial profile after a prolonged weakening in international steel prices. Simultaneously, we have chosen to withdraw the rating for commercial reasons. Accordingly, Fitch will no longer provide ratings or analytical coverage for SAIL," the agency said in a statement.
India's largest steelmaker SAILs financial profile has deteriorated due to prolonged weakening in international steel prices and its capacity expansion has "magnified" the impact of weak prices, Fitch had earlier said.

"SAILs debt-funded capex programme has magnified the impact of weak prices," it added.
The agency expects SAILs financial profile to remain weak for the next 18 months and improve only moderately towards the end of the financial year ending March 21, 2018.

Indian steel demand is likely to improve over the medium-term, which will support better profitability at SAIL, it said.
The negative outlook reflects the risk of further weakening in steel prices, increase in Indian steel imports and weaker-than-expected steel demand over the next 12-18 months, which would make it difficult for SAIL to improve its profitability and thus its leverage, Fitch said.

Indian steel makers have been battling falling steel prices, high imports and muted demand in the last 12 months.
The Maharatna firms financial profile is likely to improve only from 2017-18, when sales volumes increase and profitability widens following better operating efficiency and cost control measures, Fitch noted.