Brickwork Ratings has downgraded the non-convertible debenture and various other fund-raising programmes of Tata Steel due to sudden change of guard at the group level.

The present rating downgrade reflects uncertainty over vital decisions such as cost-cutting and deleveraging the balance sheet concerning the unprofitable UK operations.

Tata Steel has said the ratings change has resulted due to the uncertainty consequent to the recent change at the top management at the holding company and group level which could slow down vital decisions such as cost-cutting and deleveraging the balance sheet concerning the unprofitable UK operations and restructuring of the European business.

Unless the company takes appropriate measures, it may lead to a further deterioration in financial profile of the company, said the rating agency.

The rating has factored in the company’s diversified product portfolio, backward integrated India operations in the form of captive iron ore and coal mines making it one of the lowest cost producers of steel, large market share in steel Industry and start of operations at the Kalinganagar plant in Odisha.

The rating reflects the sluggish demand growth in Europe, volatility in raw material prices and high dependence on import of raw material for European operations. The rating is constrained by high consolidated financial leverage with overall deterioration in gearing, primarily due to the loss-making UK operations.

In June, the company had sold its UK longs business, including Scunthorpe Steel Works (with a capacity of 4.5 million tonnes per annum) to Greybull Capital. The company now has three principal facilities in UK and Netherlands with a total steel production capacity of 12.90 million tonnes per annum.

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