Global credit rating agency Standard & Poor's Ratings Services has announced that it has revised the outlook on India-based steelmaker Tata Steel to stable from negative, while affirming its 'BB' long-term corporate credit rating on Tata Steel.
S&P stated that its outlook revision reflects the expectation that Tata Steel's operating performance will improve over the next three years. The rating agency anticipates that the completion of the first phase of the Orissa greenfield project will generate positive free operating cash flow starting from the financial year 2015-16 ending March 31, 2016.
Over the next three years, S&P expects a rise in steel output of 3.5 million to 4 million mt, from the current 8.5 million mt, from the company's high margin India operations to boost operating performance. Tata Steel is increasing the capacity utilization level at its plant in Jamshedpur and commissioning a greenfield project with a capacity of 3 million mt per year in the first half of 2015. At the same time, the rating agency expects the company to gradually strengthen its operating performance in Europe with the improving economic environment in the UK and the euro zone.
