Credit Rating Information Services of India Ltd (Crisil) has downgraded the debt instruments of four companies, including the Rs 15-crore non-convertible debenture (NCD) issue of Blue Dart Express.
It has downgraded the Blue Dart issue from AA- to A+, while the Rs 5.0-crore NCD issue of Elbee Services has been scaled down from A to BBB. The NCD as well as the partly convertible debenture (PCD) issue of JK Udaipur Udyog have been downgraded from A to BBB+. The AA- NCD issue of Ganesh Benzoplast (GBL) was downgraded to A, while its fixed deposit programme has been downgraded from FAA to FA+.
The Blue Dart Express issue has been downgraded mainly because of the sensitive nature of airline operations and its impact on the financial performance of the company. The delay in stabilisation of the airline operations and the increase in operating costs, which were not backed by commensurate growth in income, are expected to result in a drop in operating margins in 1996-97.
The GBL issue has been downgraded because of the delays in the commissioning of new projects, which will affect the expected profitability and liquidity of the company. However, the high equity component in the project funding has partially mitigated the pressure on debt:equity ratio.
Crisil said it has lowered the rating for the Elbee issue on account of lower sales growth and support to the group company Elbee Airlines and unsatisfactory track record in payment of debt obligations. However, the rating of BBB indicated moderate safety of timely payment of interest and principal. The Ganesh Benzoplast issue has been downgraded because of the delays in the commissioning of new projects which is likely to affect the profitability and liquidity of the company. However, the high equity component in funding various projects in which the company is involved for the last couple of years would offset the pressure on debt:equity ratio. Crisil said JK Udaipur Udyogs capital structure offers limited cushion for further leveraging and given the outlook on cash flows and financial flexibility, interest coverge ratios could be affected in the near future.
Also, the highly competitive nature of the cement market and oversupply together have taken its toll on its financial performance.
