Rating Watch
Sail bonds, FD downgradedThe rating of SAIL's outstanding bonds programmes have been downgraded to "AA-" from "AA". The revised rating indicates that the degree of safety regarding timely payment of interest and principal on the instrument is high. The rating of SAIL's fixed deposit programme has been downgraded to "FAA" from "FAA+". The revised rating indicates that the degree of safety regarding the timely payment of interest and principal on the instrument is high. An "P1+" rating has been assigned to the Rs 1200 crore programme of SAIL. The rating indicates that the degree of safety regarding the timely payment of financial obligation on the instrument is very strong. The revision in ratings is on account of sustained pressures on the company's business lines increase in competition-domestic and imports, debt oriented funding of large modernisation programme, an increase in financial risk profile due to severe erosion in profitability and increase in leveraging. Crisil expects continued
competitive pressures in the steel industry, which would limit the company's ability to pass on cost increased. It is also unlikely that SAIL's financial structure would show significant improvement given the pressures on margins and siginficantly high exposure to debt. Accordingly, Crisil expects the financial ratios in terms of net margins, interest coverage etc to be depressed in the medium term. The ratings continue to factor in SAIL's position as the largest manufacturer of steel in the country, a position unlikely to be threatened in the medium term and the long term growth prospects of the industry. Crisil reaffirms Indal FD The "FAAA" rating assigned to the fixed deposit programme of Indian Aluminium Company Limited (INDAL) has been reaffirmed. The rating indicates that the degree of safety regarding timely payment of interest and principal on the instrument is very strong. A "P1+" rating has been assigned to the Rs 150 crore commercial paper programme (enhanced from Rs 70 crore) of
INDAL. The rating indicates that the degree of safety regarding the timely payment of financial obligations on the instrument is very strong. The ratings reflect the company's strong position in semi-fabricated aluminium business, comfortable position of its chemicals business, its conservative financing policy and comfortable liquidity position. These strengths are however tempered by the relatively weak metal linkage of the company. The ratings also factor in INDAL's association with Aluminium Company of Canada Limited (ALCAN) and the advantages accruing to INDAL therein. INDAL, part of the ALCAN group of companies, is the largest downstream fabricator of Aluminium in India. The company's operations are vertically integrated and include bauxite mining, alumina refining, primary aluminium sticting and semi-fabrication facilities. The company's product mix mainly consists of semi-fabircated products, which constitute over 70 per cent of its operating income. In 1996-97, the company reported post tax profitsof Rs 59.19 crore on an operating income of Rs 1,022.28 crore. Crisil downgrades Altos India FD The rating of Altos Indian Limited (AIL) fixed deposit programme has been downgraded to "FD" from "FB+" indicating that the issue is either in default or it expected to be in default upon maturity. The revised rating reflects the deteriorating position of the company with reduced business volumes and declining profitablity adversely affecting the coverage ratios, high leveraging limiting financial flexibility and cash generation from operations largely locked up in increased debtors and inventories. Besides ongoing working capital requirements, AIL's repayment obligations are relatively high and the strained cash flow situation is likely to affect the company's ability to meet these obligations in a timely manner. AIL manufactures a range of computers sold in the domestic market through its affiliate Pectech Computers Limited (PCL) and is contract manufacturer to certain leading international
companies. State Bank of Indore FD, CD reaffirmed The "FAA" rating assigned to the fixed deposit programme of State Bank of Indore (SBoI) has been reaffirmed. The rating indicates that the degree of safety regarding timely payment of interest and principal on the instrument is strong. The "F1+" rating assigned to the certificate of deposit programme of SBoI has been reaffirmed. Simpson and General Finance FD reaffirmed The "FA" rating assigned to the fixed deposit programme of Simpson and General Finance Company Limited (S&GF) has been reaffirmed indicating adequate safety regarding timely payment of interest and principal. The rating is reflective of the group support enjoyed by S&GF from the Amalgamation group of companies and the moderate gearing of the company. The rating also factors in the overall slowdown in the corporate performance which has affected the financial performance and asset quality of S&GF. S&GF, which was incorporated in 1938, is a closely held finance company
of Simpsons & Co, the holding company of the Amalgamation Group. The company has funds deployed to the tune of Rs 7.99 crore as of March 31, 1997. State Bank of Indore FD, CD reaffirmed The "FAA" rating assigned to the fixed deposit programme of State Bank of Indore (SBoI) has been reaffirmed. The rating indicates that the degree of safety regarding timely payment of interest and principal on the instrument is strong. The `F1+' rating assigned to the certificate of deposit programme of SBoI has been reaffirmed. The rating indicates that the degree of safety regarding timely payment of financial obligations, on the instruments is very strong. The rating factors in SBoI's position as a nationalised bank, a fairly steady investment portfolio, average capital adequacy position, access to call money market offset by a relatively weak asset quality with a modest client profile, relatively small deposit base, regional nature of the bank and traditional tenure mismarch (asset-liability) in the banking
system. The rating continues to factor in its association with its parent State Bank of India (rated Crisil "AAA"). SBoI is an associate bank of The State Bank of India with operations primarily concentrated in the state of Madhya Pradesh. Apart from the traditional activities like accepting deposits and extending advances, SBoI is also engaged in government business. For the year ending March 31, 1997, the bank reported a net profit of Rs 17.06 crore on total operating income of Rs 430.82 crore. The bank had depsoits and advances aggregating to Rs 2,797.15 crore and Rs 1,606.96 crore respectively. Premier Instruments & Controls Limited-- Fixed Deposit Programme FAA (Reaffirmed) The "FAA" (prounced as F double A) rating awarded to the Fixed Deposit proramme of Premier Instruments & Controls Limited (Pricol) has been reaffirmed indicating that the degree of safety regarding payment of interest and principal is strong. The rating is reflectie of Pricol's dominant position in the dashboard
instruments market, its diversified user base which has led to a high degree of earnings stability and its cost competitiveness because of the scale of operations. The rating also takes into consideration the downturn in the automobile industry. Pricol is a Coimbatore based manufacturer of dashboard instruments and two wheeler oil pumps with a turnover of Rs 1308 million and a profit after tax of Rs 119 million for the year ended March 31, 1997.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
