ICRA assigns LBBB-, A3 ratings to EIIL

"The rating indicates a moderate credit-quality and higher than average credit risk," ICRA said in a press release issued here today.     

ICRA has also assigned an A3 rating to the Rs 30.25 crore non-fund-based limits of the company.      The assigned rating indicates moderate credit-quality.     

Instruments rated in this category carry a higher credit risk than instruments rated A2 and A1.     

 

The rating takes into account EIIL's position as the world's third-largest dry cell manufacturer, dominant market leadership in the country and strong brand equity sustained by a pan-Indian presence of distributors and EIIL's attempts to diversify into new product lines.    

 ICRA said that the rating was, however, constrained by the company's high vulnerability to commodity price cycles and limited pricing power due to the price sensitive target markets.     

The rating is also constrained by EIIL's weak credit profile, characterised by high leverage and weak cash generating capabilities.     

"The company suffers from a weak financial profile, with historically low operating margins and high interest outflow," ICRA said in the release.