Tisco gets AA plus

A AA plus (double A plus) rating has been assigned to the Rs. 200 crore non-convertible debenture programme of Tata Iron and Steel Company (Tisco). The AA plus (double A plus) rating assigned to the various outstanding non-convertible debenture programmes and bond programme of Tisco have been reaffirmed. The FAAA (F triple A) rating assigned to the fixed deposit programme and the P1 plus (P one plus) rating assigned to the Rs. 400 crore commercial paper programme of the company have also been reaffirmed. The pfAA (pf double A plus) rating assigned to the Rs. 140 crore preference share programme of the company has been withdrawn as the instrument has got redeemed and there is no amount outstanding against the same as on date.

The ratings reflect Tisco's favourable and improving operating efficiency and its inherent low cost position in its core steel business, which has helped mitigate the risks arising out of the cyclical nature of the steel business. The ratings also takes into account the favourable impact of the company's large modernisation and capital expenditure programme which has led to a progressive reduction in its operating costs.

Further, better product mix and improved realisations have led to improvement in profitability. The ratings are however constrained by the company's low return on capital employed and moderate capital structure which are primarily due to the large capital expenditure programmes carried out by the company in the past, the benefits of which are expected in the coming years.

Tisco, the flagship company of the Tata group is the largest private sector steel manufacturer. While the company's core steel business contributes around 80 per cent of its total sales it is also present in bearings, ferro chrome and tubes businesses. During 2000-01, the company reported a PAT of Rs. 553 crores (Rs. 423 crores) on a net sales of Rs. 6,315 crores (Rs. 5,666 crores).

- Corporate Bureau

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Section  : Business
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