Crisil downgrades ratings for Hindalco, Sterlite

Rating agency Crisil today downgraded long-term debt rating of leading non-ferrous metal producers -- Hindalco, Vedanta Aluminium and Sterlite Industries, expecting their earnings to remain under pressure over the medium-term. Even as it revised the rating of Sterlite and VAL to AA from AA+, Crisil said it has retained long-term debt rating of other Vedanta group firms -- Bharat Aluminium Company (Balco), Hindustan Zinc and Madras Aluminium Company (Malco). Crisil expects "a decline in the company's (Sterlite) consolidated profitability and cash accruals over the medium-term" and said its view on Vedanta Aluminium Ltd (VAL) follows the downward revision of its group firm Sterlite's ratings. The rating agency has also downgraded the long-term debt rating of the country's largest aluminium producer, Hindalco Industries, to AA- from AA, while revising down its long-term outlook from stable to negative. "Weak aluminium prices will keep the company's earnings under pressure over the medium-term...The decline in accruals, coupled with large planned capital expenditure will also keep the company's gearing high," the release added. Instruments rated 'AA' offer an adequate degree of safety with regard to timely payment of financial obligations, '-' or '+' denote a notch lower or upper, respectively.