Fitch cuts Bhushan Steel debt to A(ind)

Fitch Ratings said it downgraded Bhushan Steel Ltd.'s issuer rating and rating on its Rs. 250 million long-term debt to A(ind) from A+(ind) and the rating on its commercial paper program to F1(ind) from F1+(ind) with the amount enhanced from Rs. 1 billion to Rs. 1.5 billion.

The downgrades reflect the higher level of financial risk undertaken by the company on account of a large debt funding for its proposed capacity expansion by another two million ton per annum in Orissa, Fitch said. Coupled with the debt raised for the existing projects, these issues limit improvement in the company's financial leverage earlier anticipated by Fitch.

The ratings continue to benefit from the company's position as a leading cold rolled steel manufacturer, consistent improvement in size and profits, as well as expected improvement in cash flows due to the progressive commissioning of the Orissa project, the agency said.

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