Icra Puts Xerox On Rating Watch

Close on the heels of the Centre's probe into Xerox Modicorp (XMC), rating agency Icra placed the MA+ rating assigned to Rs 65 crore medium term debenture programme of XMC on rating watch with negative implications.

The rating action takes into account disclosures by Xerox Corporation of the US, the main shareholder of XMC, to US Securities Exchange Commission about the improper payments made by XMC, its Indian subsidiary, to government officials over the years to push governmental sales.

Though XMC's rating does not derive any financial support from XC but it does factor in the strong managerial, technical and product support. ICRA will continue to monitor developments both in India and the US before taking any final rating decision which would be announced in due course, Icra said in a press release issued here on Friday.

The rating action also takes into account investigation of XC's accounts by SEC which has resulted in restatement of XC's accounts and net income reversal of $1.4 billion for the five year period 1997 to 2000. XC is rated B1 with negative outlook by Moody's Investors Service.

The outstanding adequate safety rating of XMC takes into account its established position in the Indian copier market and a large base of installed machines which will continue to offer stable service income, the press release said.

XMC has reported a fall of 14 per cent in net sales at Rs 530.5 crore for the year ended December 2001, while its net profit shoot up to Rs 14.7 crore from Rs 8.6 crore in the year December 2000.

This was mainly of account of improved margins and reduction in the borrowing levels from Rs 218.4 crore in 2000 to Rs 126.5 crore in 2001.