Usha Beltron Among 4 Issues Downgraded

According to a press release, the Rs 20 crore non-convertible debenture programme of Usha Beltron was downgraded from AA to AA-.

The new rating indicates a high degree of safety regarding timely payment of interest and principal. UBL is the countrys fifth largest manufacture of jelly-filled telecommunication cables (JFTC) and caters primarily to the Department of Telecommunications (DoT).

It also entered the real estate business in 1995-96. The drop in the growth rate of the telecommunications industry from 20 per cent to 10 per cent in 1995-96 has affected the fortunes of JFTC manufacturers.

Also, the deferred payment credit (DPC) sales followed by the DoT for procuring a part of its cable requirements has caused losses to suppliers because the yield on DPC sales is lower than the cost of financing the sale.

 

Moreover, in 1996-97, the delay in fresh orders from the DoT due to the general elections and the telecommunication controversy stifled growth further. The industry is at present witnessing substantial inventory levels resulting in high carrying costs and strained cash flows.

UBLs working capital needs are likely to increase and investments in the real estate venture are also likely to have a long lock in period. This will have bearings on the companys cash flow position.

UBLs fixed deposit programme was assigned an FAA- and its commercial paper programme was given a P1 rating. Both ratings indicate a high degree of safety.

The fixed deposit programme of Suman Motels Ltd was downgraded from FA to FB. The FB rating indicates inadequate safety of timely payment of interest and principal.

Last year the company launched its Earth Bond scheme for fruit/vegetable cultivation the scale of which is large compared to the groups existing scale of operations. At a