Fitch cuts Mahindra Ugine Steel debt to BBB+(ind)

Fitch Ratings said it downgraded Mahindra Ugine Steel Co. Ltd.'s national long-term rating to BBB+(ind) from A-(ind) and revised the outlook to negative from stable. Its long-term debt of Rs.1.83 billion was downgraded to BBB+(ind) from A-(ind); fund-based working capital limits of Rs.1.4 billion was downgraded to BBB+(ind)/F2(ind) from A-(ind)/F1(ind); and non-fund based working capital limits Rs.2.2 billion was downgraded to F2(ind) from F1(ind); its long-term debt of Rs.1.48 billion, rated A-(ind), has been enhanced to outstanding long-term debt of Rs.1.83 billion and rated BBB+(ind).

The actions reflect the material deterioration, beyond what was anticipated, in Mahindra's financial profile and key credit metrics over the nine-month period that ended in Dec., Fitch said.

In addition to earnings and margin pressures due to lower volumes from declining demand in sectors such as autos and manufacturing, volatility in steel prices also have been of major concern for the rating, the agency said.

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