ICRA revises ratings assigned to various debt programme of Haldia Petrochemicals
By: ICN Bureau
Last updated : March 06, 2018 8:18 pm
ICRA has revised the long term rating outstanding of the Rs. 2421 crore term loans and the Rs. 600 crore, fund-based facilities of Haldia Petrochemicals Limited (HPL) from [ICRA]BBB+ to [ICRA]BBB-.
ICRA has revised the long term rating outstanding of the Rs. 2421 crore term loans and the Rs. 600 crore, fund-based facilities of Haldia Petrochemicals Limited (HPL) from [ICRA]BBB+ to [ICRA]BBB-.
ICRA has also revised the short term rating outstanding of the Rs. 2106 crore non-fund based facilities and the Rs. 100 crore commercial paper/short-term debt programme of HPL from [ICRA]A2 (pronounced ICRA A two) to [ICRA]A3 (pronounced ICRA A three). The outlook on the long-term rating has also been revised from "Stable" to “Negative”.
ICRA has also revised the Issuer rating outstanding of HPL from [ICRA]IrBBB+ (pronounced ICRA IR triple B plus) to [ICRA]IrBBB- (pronounced ICRA IR triple B minus). The outlook on the Issuer rating has also been revised from "Stable" to “Negative”. The rating is only an opinion on the general creditworthiness of the rated entity and not specific to any particular debt instrument.
The ratings revision factor in the significant weakening of financial performance with substantial losses in 2010-11 and YTD 2011-12 which have weakened the capital structure; sharp fall in international tolling margins because of demand slowdown and over capacity globally; volatility in naphtha prices and continuing challenges in stabilising HPL’s plant post integration of Project Supermax leading to lower yields and weak tolling margins, taking a toll on the company’s financial performance.
Additionally the ownership dispute between the two principal shareholders for several years has resulted in stalling of fresh equity infusion and delayed strategic initiatives such as new investment decisions on value addition projects. ICRA notes that despite the recent verdict by the Supreme Court ambiguity lingers on the ownership issue.
ICRA has assigned a negative outlook to the rating as HPL’s financial performance is likely to remain adverse in the near to medium term because of the weak outlook for tolling margins. Key rating sensitivities would be the company'''s ability to correct the capital structure as well as obtain more favourable repayment terms for the loans.
The ratings however positively factor in HPL’s demonstrated track record in the petrochemicals business, , its leading market position in the Eastern India market for polymers, locational advantage in servicing Eastern India and Asian export demand and favourable outlook for polymers demand in India over the long term from several end users. The ratings also consider the cyclicality inherent in the petrochemicals business and the vulnerability of its profitability to changes in import duty levels and Rupee-US dollar parity.
ICRA
Haldia Petrochemicals
First Published : December 06, 2011 12:00 am