MUMBAI, APRIL 16: The new trend of announcing dividend and then revoking it seems to be fast gaining ground, dampening the investor confidence in the corporate sector. Much to the chagrin of investors, Flex Engineering and Flex Industries of the Delhi-based Flex group have cancelled the earlier proposed dividend of 10 per cent each for 1996-97.The two Flex group companies plunged into losses in the first-half ended December 1997. Flex Industries' net dropped from Rs 17.35 crore to a loss of Rs 1.71 crore. Net profit for the year ended June 1997 stood at Rs 21.98 crore. Flex Engineering incurred a net loss of Rs 6.49 crore for the six months ended December 1997 against a profit of Rs 10.06 crore in the corresponding half of the previous year.
Crisil, a leading rating agency, had recently downgraded the debt programmes of Flex Engineering and Flex Industries to the substantial risk category, just one notch above the default category. The Rs 50-crore NCD programme of Flex Engineering has been downgraded to`C' from `triple-B' and two NCD programmes of Flex Industries amounting to Rs 143.89 crore to the `C' category. A PCD programme of Flex Industries amounting to Rs 39.33 crore has been downgraded to the `C' category. Crisil also downgraded Flex Industries' FD programme to the substantial risk category from `FA-'.
The revised rating of Flex Engineering's debenture reflects Crisil's concerns at the decline in the company's financial performance during the year, pressure on operating profits and a strain on the company's liquidity position.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
