By: ICN Bureau
Last updated : March 06, 2018 8:18 pm
CRISIL has placed the bank facilities and debt instruments of Chambal Fertilisers and Chemicals Ltd (Chambal) on "˜Watch with Developing Implications' following Chambal's announcement of demerging its shipping business into Indian Steamship Ltd
CRISIL has placed the bank facilities and debt
instruments of Chambal Fertilisers and Chemicals Ltd (Chambal) on ?Watch with
Developing Implications? following Chambal?s announcement of demerging its
shipping business into Indian Steamship Ltd (ISS), currently a wholly owned
subsidiary of Chambal.
As part of the demerger scheme, the shipping assets and liabilities will be
transferred to ISS. Chambal will be investing Rs.100 million as redeemable
preference shares and Rs.3.28 billion as equity for a 44 per cent stake in ISS.
CRISIL believes that transfer of the asset-heavy shipping business to an
independent entity will benefit Chambal?s business profile and augment its
return on capital employed. The demerger is also aimed at de-leveraging
Chambal?s capital structure. While the final contours of the demerger scheme are
in the process of being worked out, CRISIL is in discussion with the management
of Chambal to understand the modalities of transfer and assess the impact of the
proposed transfer on Chambal?s ratings.
The ratings continue to reflect Chambal?s established position in the urea
industry, superior operating efficiency, and high financial flexibility. These
rating strengths are partially offset by the company?s leveraged capital
structure, and by the regulated nature of the fertiliser industry.