State-owned SAIL, already among the low-cost producers of steel in the world, will see its production cost coming down further in the next 18-24 months, credit rating agency Standard & Poor's (S&P) said today.
The country's largest integrated steel company, with 22-25 per cent market share, has strong cash flow generation and good access to funding, S&P said, while assigning 'BBB-' rating to the company.
The agency's 'BBB-' rating is below the highest category assigned to a company in the country.
"The rating on SAIL reflects the company's strong competitive position in the domestic steel industry, supported by the robust demand for steel in India," S&P said.
"We expect SAIL's production cost to reduce further in the next 18-24 months because of the company's efforts to consistently improve its operating efficiency," it added.
S&P said SAIL's financial risk profile is intermediate, backed by strong cash flow generation.
As on December 31, 2009, the company had cash and cash equivalents of Rs 23,830 crore compared with Rs 5,930 crore of short-term debt outstanding, the rating agency said, adding, the total debt as on December 31, 2009, was Rs 14,900 crore.
"We expect the company to fund its sizeable capital expenditure plans through internal cash generation, bond issuances, and credit facilities with local banks and export credit agencies in the next 12-18 months," S&P said.
