Highest safety rating to Asian Paints

A `AAA' rating has been assigned to the proposed Rs 60 crore NCD issue of Asian Paints (APIL), indicating highest degree of safety regarding timely payment of interest and principal. The rating of the Rs 30 crore commercial paper programme of APIL has been retained at `P1+' indicating that the degree of safety regarding timely payment on the instrument is very strong. These ratings indicate APIL's strong market position in the decorative paints segment arising out of an extensive distribution network and wide product base. These ratings also factor APIL's strong operating efficiently aided by dispersed manufacturing locations and backward integration, and strong financial position of the company.

AA+ rating for Ashok Leyland's Rs 250cr NCD issue

The Rs 250 crore NCD of Ashok Leyland (ALL) has been assigned a `AA+' rating. The rating of the existing NCD programmes of the company have been reaffirmed at `AA+'. The rating indicates that the degree of safety with regard to timely payment of interest and principal is high. The rating of the company's fixed deposit programme has been reaffirmed at `FAA+'. This indicates that the degree of safety with regard to timely payment of interest and principal is strong. A `P1+' rating has been assigned to the company's 50 crore commercial paper programme, which indicates that the degree of safety with regard to timely payment of interest and principal is very strong. ALL is the second largest manufacturer of commercial vehicles in the country. The company has a wide product range which includes light, medium as well as heavy commercial vehicles in addition to industrial and marine engines. It has maintained its position in the commercial market during the year with sales of 45,259 vehicles in 1996-97 as compared to 37,901 vehicles in 1995-96. ALL has reported an improved performance in 1996-97 with increased sales, improvement in operating profitability as well as increased profits. The company's sales and net profits have increased from Rs 1,789.7 crore and Rs 113 crore in 1995-96 to Rs 2,181.3 crore and Rs 124.9 crore respectively in 1996-97.

`AA+' rating for Rs 200cr NCD programme of Tata Finance

A `AA+' rating has been assigned to the Rs 200 crore NCD programme of Tata Finance (TFL). This indicates high safety with regard to timely payment of interest and principal. The `P1+' rating assigned to the commercial paper programme has been reaffirmed, indicating that the degree of safety regarding timely payment on the instrument is very strong. The rating reflects the company's overall strength that it derives from its ownership by the Tata group, its market position in commercial vehicle financing, the strong synergy with Telco's business, comfortable resource position and favourable asset liability matching. The rating also takes into account the declining collection efficiency, sustained high levels of gearing and fall in profitability.

Orient Press' NCD programmes downgraded

The `A-' ratings assigned to the Rs 10 crore and the Rs 7 crore NCD programmes of Orient Press (OPL) have been downgraded to `BBB', indicating moderate safety of timely payment of interest and principal. The revised rating reflects the lower than projected growth in volumes in the recently set up flexible packaging and paper carton manufacturing divisions. This had an adverse impact on OPL's financial performance, particularly profitability and gearing. Moreover, increase in debt levels has put the company's liquidity position under strain. However, this is partially offset by the company's dominant position owing to its having the largest capacity in the printing industry. OPL is the market leader in printing of public issue stationery. It has recently diversified into manufacture of flexible packaging and paper board cartons.

NCD and FD programmes of Onida Finance downgraded

The outstanding rating assigned to the Rs 10 crore NCD issue of Onida Finance (OFL) has been downgraded from `BBB' to `BB+', which indicates inadequate safety regarding timely payment of interest and principal. The `FA' rating assigned to the fixed deposit programme has been downgraded to `FB+', indicating that the degree of safety regarding timely payment of interest and principal is inadequate. The revised rating reflects an adverse change in OFL's overall risk profile. This is due to declines in business performance, deterioration of asset quality, and increased debt funding of operations. This, coupled with declining spreads from its fee based operations, have resulted in considerable pressure on the profitability of the company.

The reported profits of the company declined in 1996-97 despite following a liberal depreciation policy. The funding of operations in 1996-97 has largely been debt-oriented resulting in adverse change in OFL's capital structure.

OFL's exposure to its group companies in the form of loans and equity increased in 1996-97 and these have yielded negligible returns to the company. The high volumes of debts is likely to have a negative impact on the future cash flow position of the company. The company now proposes to infuse more capital, though the exact modalities are yet to be finalised. In 1996-97, the performance of the Onida group has been under pressure as a result of which substantial support to OFL cannot be expected.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.