Tata Steel pierces sovereign rating

Tata Steel has been rated Baa2 with a stable outlook by Moody's, which means it is a notch above the sovereign rating. India is currently rated Baa3 by the US-based rating agency.

With this, Tata Steel's rating is now on a par with the credit rating of leading global steel companies such as Arcelor and ThyssenKrup.

The French steel maker Arcelor is the world's second largest steel company.

The State Bank of India is the only other Indian entity to be rated at Baa2. Former ICICI was the first Indian entity to get a higher than sovereign rating in January 2002.

B Muthuraman, managing director, Tata Steel, said: "We had approached Moody's sometime ago and after three months of studying the company, it has assigned this rating to us. As part of our strategy to raise funds for our expansion plans, this rating will now help us tap the global markets better."

Koushik Chatterjee, vice president - finance, Tata Steel, "The financial competitiveness of a company is much better at a rating which is on a par or higher than the soveriegn rating." The new rating reflects Moody's opinion on Tata Steel's ability to honour its financial obligations.

The company's board has recently approved the proposal to raise upto Rs 5,000 crore for funding the company's expansion projects. "A part of the funds will be generated through debt and we will be looking at the international bond markets for the same," Chatterjee said.

The company has called for an extra ordinary general meeting on March 24 for receiving approval for the proposal from its shareholders. Tata Steel has lined up an expansion plan of around Rs 8,000 crore for increasing its capacity to 7.4 million tonne per annum.

The company is currently undergoing an expansion of one million tonne, which will take its installed capacity to 5 million tonne per annum.