MUMBAI, February 9: Credit Rating Information Services of India Ltd (Crisil) has downgraded two debenture issues of DCM Shriram Industries amounting to Rs 46.95 crore to the default category. The agency has also downgraded the company's FD programme to the default category.The revised ratings indicate the debentures are in default and in arrears of interest or principal payments or are expected to default on maturity. The ratings reflect the adverse impact on the operating margins in the company's main lines of business, increased working capital requirements funded through borrowings, high leveraging and weakening coverage ratios.
DCM is engaged in the manufacture of sugar and rayon cord and recently hived off its textile business unit. The company's strained cash-flow situation is likely to affect its ability to meet its obligations in a timely manner.
The rating agency has also downgraded the Rs 20 crore non-convertible debenture (NCD) issue of Kopran Ltd to `AA-' from `AA'. The revised ratingindicates that thand principal is high.
The revised rating reflects the company's increasing financial risks on account of rising gearing levels, declining interest coverage ratios and prospective pressures on operating margins. The rating however continues to derive support from the company's strong market position in semi synthetic penicillins (SSP) as one of the leading worldwide players, the well integrated nature of its SSP manufacture and the company's long presence in the pharmaceutical industry.
Crisil has downgraded the NCD and FD programmes of Network Ltd to the default category. The revised rating refelects the deterioration in overall risk profile on account of decline in the business performance with cessation of manufacturing operations and large losses over the past two years which have eroded the networth of the company.
The downgrading of Network also reflects Crisil's concern at the discontinuation of the company's main lines of business and shift to trading operations on a low scalewhich is likely to constrain future cash flows of the company.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
