Global credit rating agency Moody's downgraded JSW Steel's corporate family rating by two notch to Ba3 with negative outlook, citing weaker-than-expected quarterly results.

JSW Steel reported a quarterly loss of Rs. 923 crore last week as it continues to be impacted by strong competition from cheap steel imports from China, Russia, Japan and South Korea. EBITDA per tonne halved to Rs. 3,443 from Rs. 6,987 a year ago.

"The two-notch downgrade reflects JSW's weaker than expected operating performance as a result of persistently weak steel prices, and our expectation that this low steel price environment will continue over the next 12 to 18 months", said Kaustubh Chaubal, Moody's Vice President and Senior Analyst.

Moody's cited steel import volume data that showed 30% increase in the first nine months of the financial year, despite the implementation of protectionist measures against imports.

Moody's said while JSW has undertaken several measures to reduce costs, conserve cash flow, and minimize the rise in debt, the severe drop in steel prices has strained earnings and increased leverage. It does not expect EBITDA per tonne to return to levels seen in prior years.

It said JSW's balance sheet liquidity position remains weak with cash and cash equivalents of Rs. 1161 crore at December 2015 against a higher amount of short term debt and maturities over the next 12 months. The company had a net debt of Rs. 39483 crore as on December 31.

It said JSW's balance sheet liquidity position remains weak with cash and cash equivalents of Rs. 1161 crore at December 2015 against a higher amount of short term debt and maturities over the next 12 months. The company had a net debt of Rs. 39483 crore as on December 31.

 

indiatimes.com

 

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