Fitch: Uttam outlook negative

Fitch Ratings said it revised Uttam Galva Steels Ltd.'s outlook to negative from stable and affirmed its national long-term rating and Rs. 19.32 billion of long-term debt at Fitch A(ind).

The agency said the outlook revision reflects Uttam's continuing high financial leverage of more than 4 times due to the higher debt levels driven by its debt-led capital expenditures, which were used to add downstream production facilities, make technological and other process improvements and de-bottleneck existing facilities. Fitch noted that the improved production facilities will lead to an improvement in the business profile of the company, and the agency expects Uttam's net financial leverage to improve to below 4.5 times in 2013.

The ratings continue to reflect Uttam's market position as one of India's leading producers of galvanized and cold-rolled products, its demonstrated track record of growth in revenue and margins and the company's diversified customer profile, the agency said.

The ratings remain constrained by Uttam's lack of backward integration and high competition in the domestic market, Fitch said.

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