By Mahaveer Jain

India Ratings and Research (Ind-Ra) has rated Tata Steel Limited’s (TSL) additional non-fund-based limited as follows:

Instrument Type

Date of Issuance

Coupon Rate

Maturity Date

Size of Issue (billion)

Rating/Outlook

Rating Action

Non-fund-based limits

-

-

-

INR4

IND AA/Stable/IND A1+

Assigned

KEY RATING DRIVERS

For a detailed drivers section, please click here.


RATING SENSITIVITIES

Positive: Adjusted net leverage reducing below 3.0x on a sustained basis would lead to a positive rating action. 

Negative: 
Any substantial debt-led acquisitions or higher-than-expected capex outflows leading to an increase in the adjusted net leverage above 4.0x on a sustained basis would lead to a negative rating action.


COMPANY PROFILE

TSL commenced operations in 1907, with the establishment of India’s first integrated steel plant. At FYE18, TSL had a global crude steel production capacity of 27.3mtpa across Jamshedpur (9.7mtpa), South East Asia (2.2mtpa) and Europe (12.4mtpa post divestment of the UK long products business). The company added a new capacity in Kalinganagar, phase I (3.0mtpa) of which was commissioned in May 2016.

FINANCIAL SUMMARY
 

Particulars

FY18

FY17

Revenue (INR billion)

1,323

1,154

Operating EBITDA (INR billion)

218

131

Operating EBITDA margin (%)

16.5

11.4

Closing net debt (INR billion)

754

779

Operating EBITDAR/net interest expense (x)

3.7

2.5

Adjusted net debt/operating EBITDAR (x)

3.3

5.6

Source: TSL, Ind-Ra


RATING HISTORY

Instrument Type

Current Rating/Outlook

Historical Rating /Rating Watch

Rating Type

Rated Limits (billion)

Rating

22 February 2019

7 November 2017

10 October 2016

Issuer rating

Long-term

-

IND AA/Stable

IND AA/Stable

IND AA/RWE

IND AA/RWE

Commercial paper*

Short-term

INR150

IND A1+

IND A1+

IND A1+

IND A1+

Non-convertible debentures (NCDs)*

Long-term

INR71.51

IND AA/Stable

IND AA/Stable

IND AA/RWE

IND AA/RWE

Bank facilities*

Long-term/Short-term

INR190.58

IND AA/Stable/IND A1+

IND AA/Stable/IND A1+

IND AA/RWE/IND A1+

IND AA/RWE/IND A1+

Working capital facilities

Long-term/Short-term

USD0.10

IND AA/Stable/IND A1+

IND AA/Stable/IND A1+

IND AA/RWE/IND A1+

IND AA/RWE/IND A1+

*Details in Annexure

ANNEXURE

Instrument

ISIN

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (billion)

Rating/Outlook

Fund-based cash credit limits

-

-

 

-

INR20.25

IND AA/Stable

Fund-based cash credit limits

 

 

 

 

INR0.25

IND AA/Stable/IND A1+

Long-term debt (term loan)

-

-

 

April 2019-April 2027

INR72.5

IND AA/Stable

Non-fund-based limits

-

-

 

-

INR97.58

IND AA/Stable/IND A1+

Commercial paper

 

 

 

180 days

INR150

IND A1+

NCDs

INE081A08132

May 2009

10-11

May 2019

INR15

IND AA/Stable

NCDs

INE081A08124

May 2009

10-11

May 2019

INR6.51

IND AA/Stable

NCDs

INE081A08223

March 2019

9.8359

March 2034

INR43.15

IND AA/Stable

NCDs*

 

 

 

 

INR6.85

IND AA/Stable

* Yet to be issued


COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.
 

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

DISCLAIMER

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Applicable Criteria

Analyst Names

  • Primary Analyst

    Mahaveer Jain

    Associate Director
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th Floor, West Wing, Bandra Kurla Complex, Bandra East,Mumbai - 400051
    +91 80 46666817

    Media Relation

    Namita Sharma

    Manager – Corporate Communication
    +91 22 40356121