The upgrade is driven by the substantial and sustainable improvement in SAILs balance sheet strength as a result of the upswing in steel prices and internal initiatives to improve efficiency. This improvement is manifested in a significant reduction in its debt levels aided by strong accruals in the last few quarters, and a consequent improvement in its debt protection measures, Crisil said in a statement. SAILs large cash accruals of about Rs 4,000 crore in 2003-04 helped it reduce its debt levels by 33% during the year. Its debt protection measures have also improved with net cash accruals at 42% of its total debt in 2003-04 as against 9% in 2002-03, and are likely to rise further in 2004-04.
In addition, the rating reflects the strong market position that the company continues to enjoy as the largest steel producer in the country and the 15th largest in the world, said Crisil. Crisil expects SAIL to further improve its financial profile in the medium-term. It also expects it to moderate its capital expenditure plans in case its accruals are lower than anticipated.
Crisil has also re-affirmed the AAA/Stable/FAAA and P1+ ratings on TISCOs non-convertible debenture, fixed deposits and commercial paper programmes, respectively. The ratings are driven by the significant strengthening of the companys balance sheet aided by the longer than anticipated up-cycle in steel prices.