New Delhi: Ratings agency Moody’s has upgraded its outlook on Vedanta Resources to ‘stable’, from ‘negative’ earlier, contending that the worst is over for the company.
“With some of Vedanta’s idled iron ore, copper and aluminium assets now operating, we believe that the worst is past for Vedanta even as commodity prices remain broadly flat,” said Alan Greene, Moody’s Vice President – Senior Credit Officer.
Moody’s said Vedanta’s rating outlook has been carrying a ‘negative bias’ since August 2010.
The rating outlook was also under review for potential downgrade as the company embarked on debt-funded buy of Cairn India and when Vedanta was slow to pre-arrange funds for the repayment of a convertible bond in April last year.
Notwithstanding these events, the underlying operations have continued to make progress and the presence of Cairn India is a major factor in stabilising the overall business, Moody’s said.
“While we expect Vedanta’s performance and credit metrics for the year just completed to be softer than for FY’13, we nevertheless take the view that a downgrade from the current Ba1 level is increasingly unlikely and have therefore stabilised the rating,” he said.
Apart from taking steps to reinforce its credit profile, Vedanta has also simplified its group structure through the formation of Sesa Sterlite Limited in August 2013 and improved its liquidity profile.