Moody's affirms TCL Ba2 ratings
Moody's Investors Service, a leading provider of credit ratings, research, and risk analysis, has affirmed Tata Chemicals Limited's (TCL) Ba2 corporate family rating and maintained the stable outlook.
Moody's acknowledged that TCL's performance in recent years has benefited from steady growth derived from both acquisitions and organic expansion while maintaining an adjusted EBITDA margin of more than 17pc .
While this level of margin is strong for its rating category, its balance sheet and liquidity profile are commensurate with a Ba range rating.
The company's global acquisitions have provided given scale and geographic diversification to the Group's soda ash and salt businesses, and TCL is the world's second largest producer of soda ash.
Approximately 60pc of Group EBITDA is generated by its Inorganic Chemical operations.
Acquisitions in this area include US- based General Chemicals Industrial Products (GCIP) acquired in 2008, while its European business has been built on the purchases of Brunner Mond (acquired 2006) and British Salt (purchased 2011).
TCL has considered large-scale expansion of its existing urea plant in India, which would help to reduce the country's imports of the fertiliser, but the supply of natural gas has been a stumbling block.
Moody's said it expects TCL to continue at its current brisk rate of growth with further small investments to bolster existing activities and continuing cost reduction and productivity improvements.
TCL's working capital requirements are highly correlated with movements in raw material costs, selling price and seasonality.
TCL supports these with various fund and non-fund credit lines which are adequate in size.
The Tata Group has subscribed to preferential share placings made by TCL.
As part of the Tata Group, Moody's said it expects TCL to enjoy continued, favourable access to bank facilities.
Commenting on the Moody's rating, P K Ghose, Executive Director and Chief Financial Officer, Tata Chemicals Ltd., said, "We respect Moody's rating of our company and are happy that it has been recognized that despite adverse market conditions, our Company has exhibited steady growth.
"Going forward too, we expect the Indian market to continue the growth momentum. We're also positive that our diversity in product portfolio will help reduce volatility and balance our earnings in the future."
A part of the over USUSD 100 billion Tata Group, Tata Chemicals Limited (TCL) is an Indian global company with interests in chemicals, crop nutrition and consumer products.