NEW DELHI, NOV 8: Investment Information and Credit Rating Agency (ICRA) has downgraded the rating assigned to the Rs 10 crore non convertible debenture programme of Kajaria Ceramics Limited (KCL) from LAA rated earlier to LA. The revised rating indicates adequate safety, according to Icra.The downgrade takes into account the overcapacity in the ceramic tiles industry which has led to a pressure on realisations for all the manufacturers.
Lower growth in the ceramic tiles offtake due to slowdown in housing and construction activity has hit Kajaria's profitability, Icra said. Net profit margins dropped from 20 per cent in 1996-97 to 13 per cent in 1997-98, it added.
There was also a cost overrun of Rs 23 crore at the company's new plant at Bhiwadi in Rajasthan which was primarily funded through debt, Icra said. Moreover, increasing competition resulted in higher working capital requirements, it added.
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