Duff & Phelps Cuts Anubhav Rating

Duff & Phelps Credit Rating India Private Ltd (DCR India) yesterday downgraded the collective investment `Teak Farm Scheme' of Anubhav Plantations Ltd from DCR Ind 4 (CIS) to DCR Ind 5 (CIS).

A DCR Ind 5 (CIS) rating indicates the company's ability to meet its stated obligations to investors on time is poor and that the scheme has defaulted or can be expected to default on its stated obligations.

The downgrade comes in the wake of unsuccessful efforts by DCR India officials to establish contact with Anubhav officials.

According to a DCR communique, "Although press reports indicate that the management is exploring options of mobilising resources from various sources, efforts by DCR India officials to establish contact with Anubhav personnel for clarifications have been unsuccessful."

The communique stated that Anubhav's rating had been severely impacted by the high degree of uncertainty associated with the plantation industry, absence of standardised accounting policies, low capitalisation, and lack of support from banks, financial institutions and other financial intermediaries.

Anubhav is also yet to submit quarterly audited statements, which was one of the terms of the earlier DCR rating, and it has been delaying payments to investors of earlier schemes, which were not rated, the DCR release said.

Scores of Anubhav group investors with dishonoured checks thronged the company's headoffice at Chennai after the group failed to repay deposits worth Rs 139.8 crore to investors on October 21. Company officials had, however, abandoned the premises. About 80,000 depositors have invested money in the various schemes of Anubhav.

DCR India had on July 14, 1998, assigned a DCR Ind 4 (CIS) rating to Anubhav's Rs 50 crore Teak Farm Scheme, indicating an unsatisfactory ability to meet investor obligations on time.

"This rating was applicable only to the above mentioned scheme and not to the other schemes floated by the company in the past or to be issued in future," said N C Roy, president and managing director, DCR India.

DCR India said the company's operations and its ability to achieve projected realisations for its teak wood were critical to meeting investor obligations.

The earlier rating drew from the management's operational expertise in developing large-scale teak plantations on a commercial basis and its commitment in ensuring non-diversion of funds to the company's earlier or future schemes.

It had also considered the management's assurance of investing some collections in safe investment schemes of corporates and banks, submission of quarterly audited statements relevant to the rated scheme and Anubhav's plans to sell a substantial portion of its teak in the overseas market in value-added form, which was expected to yield competitive realisation.