By: ICN Bureau
Last updated : March 06, 2018 8:18 pm
CRISIL has downgraded its rating on the long-term bank facilities of Polychroic Petrochemicals Pvt Ltd (PPPL) to "˜B-/Stable' from "˜B/Stable', while reaffirming the rating on the short-term facility at "˜P4'.
CRISIL has downgraded its rating on the long-term bank facilities of Polychroic Petrochemicals Pvt Ltd (PPPL) to ?B-/Stable? from ?B/Stable?, while reaffirming the rating on the short-term facility at ?P4?.
| Rs.5 Million Cash Credit | B-/Stable (Downgraded from ?B/Stable?) |
| Rs.139.5 Million Long-Term Loan | B-/Stable (Downgraded from ?B/Stable?) |
| Rs.10 Million Proposed Long-Term Bank Loan Facility | B-/Stable (Downgraded from ?B/Stable?) |
| Rs.10 Million Letter of Credit | P4 (Reaffirmed) |
| Rs.5 Million Bank Guarantee | P4 (Reaffirmed) |
| Rs.17.5 Million Packing Credit | P4 (Reaffirmed) |
| Rs.27.5 Million Post-Shipment Credit* | P4 (Reaffirmed) |
* One way interchangeable between PC to Post
Shipment allowed
The downgrade reflects CRISIL?s belief that PPPL?s liquidity will remain weak
over medium term because of the company?s weak operating profitability resulting
in low cash accruals vis-?-vis debt servicing commitments.
The ratings continues to reflect PPPL?s weak financial risk profile, marked by a
small net worth, a high gearing, and modest cash accruals. The ratings also
factor in the company?s subdued pricing flexibility because of exposure to
intense industry competition. These rating weaknesses are partially offset by
PPPL?s integrated facility for manufacturing flexible intermediate bulk
containers (FIBC) and the expected improvement in the company?s capacity
utilisation.
Outlook: Stable
CRISIL believes that PPPL will maintain its
business risk profile on the back of improvement in capacity utilisation levels,
over the medium term. The outlook may be revised to ?Positive? if there is
significant improvement in PPPL?s accruals, thereby improving the company?s debt
protection metrics. Conversely, the outlook may be revised to ?Negative? in case
of further deterioration of PPPL?s capital structure, or weakening of the
company?s liquidity.