Ratings agency Fitch has assigned a low default risk to Vedanta Aluminium's Rs 10,000 crore project finance facility on the back of the guarantee provided by the company's UK-based parent.
"Fitch Ratings has assigned India's Vedanta Aluminium Ltd's (VAL) Rs 10,000 crore project finance facility a rating of 'AA(ind)(SO)'," it said in a statement.
An 'AA' ratings denote expectations of very low default risk relative to other issuers or obligations in the same country.
"The rating reflects the unconditional and irrevocable guarantee provided by VAL's ultimate parent, UK-based Vedanta Resources Plc for the project finance facility. The guarantee covers timely payment of interest and principal obligations," the statement said.
Fitch had in March removed UK-based Vedanta Resources (VRPLC) from its negative watch list and assigned a moderate 'BB' rating on its unsecured debts.
Incorporated in 2001, VAL is a majority-owned subsidiary of VRPLC, which controls 70.5% of its equity. Sterlite Industries (India), another subsidiary of VRPLC, holds the remainder.
VAL operates a 1.4-million tonne per annum (tpa) alumina refinery and a 500,000-tonne per annum aluminium smelter at Orissa, along with a captive power plant.
In 2009-10, VAL's total revenue stood at Rs 1,485 crore. The company reported a net income of Rs 199 crore for the fiscal.
Its EBITDA margins were 29% in 2009-10.
