MUMBAI, April 13: The Credit Rating Information Services of India Ltd (Crisil) has downgraded the debt programmes of Flex Engineering Ltd and Flex Industries Ltd to the substantial risk category, just one notch above the default category. The Rs 50-crore non-convertible debenture (NCD) programme of Flex Engineering has been downgraded to C from triple-B, and two NCD programmes of Flex Industries amounting to Rs 143.89 crore have also been downgraded to the C category.A partly convertible debenture (PCD) programme of Flex Industries amounting to Rs 39.33 crore has also been downgraded to the C category. Crisil has also downgraded Flex Industries' fixed-deposit (FD) programme to the substantial risk category from FA-.
The revised rating of Flex Engineering's debenture programme reflects Crisil's concerns at the significant decline in the company's financial performance during the year, pressure on operating profits and a strain on the company's liquidity position.
Flex Industries' ratings were on ratingwatch with negative implications pending the inflow of funds through external commercial borrowings (ECBs).
The company has been planning a $90-million ECB issue to tide over its liquidity problems and meet the repayment obligations in the current financial year ending June 30, 1998.
Though the company is still working on the issue, its failure to raise funds has triggered Crisil's decision to downgrade the ratings on its outstanding debt papers. Pressure on operating profits along with high interest burden and huge debt repayment requirements in the current year have put a severe strain on the company's liquidity position.
Crisil has also downgraded the Rs 130-crore bond issue of Industrial Promotion and Investment Corporation of Orissa Ltd (Ipicol) to the moderate safety category from adequate safety earlier. The revised rating reflects the deteriorating trend in state government finances, particularly the increasing level of revenue deficit and debt burden.
The rating is also constrained by theeconomic structure of the state, in spite of considerable efforts made by the state government to promote industrial growth by attracting private sector investment.
Meanwhile, the rating agency has assigned an A+ rating to the Rs 25-crore non-convertible debenture (NCD) programme of Essel Mining and Industries Ltd.
The rating reflects the comfortable business profile of the mining division and the favourable financial position of the company. The rating also derives comfort from the company's association with the Aditya Birla group of companies.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
