CARE assigns high credit ratings to Ramsarup Industries

Published on Mon, Aug 21, 2006 at 18:35 | Updated at Mon, Aug 21, 2006 at 19:46 | Source : Moneycontrol.com

Blish This

Credit Analysis & Research Limited (CARE) has assigned a PR1 rating to the Commercial Paper programme of Ramsarup Industries Limited, the second largest maker of steel wires after TATA Steel. The rating is for an amount up to Rs 50 crore, up from the earlier Rs 20 crore, for a maturity up to three months.

CARE has also assigned a PR2+ rating to Ramsarup's STD Programme, for an amount up to Rs 25 crore for a maturity up to one year.

Also Read

RSS feed for news
Click here

The PR ratings indicate the capacity for timely payment of short-term debt obligations. Accordingly, PR1 carries the lowest credit risk in this category, closely followed by PR2+.

The ratings are based on Ramsarup's good track record, the experience of its promoters, and the ability of the company to offer various grades and sizes of wires and TMT bars. The company also enjoys access to better quality raw materials and a well diversified customer base, which has enabled Ramsarup to realize improving margins.

CARE has noted an increase in input prices, profitability that remains moderate though improving, and risks from the company's new projects, as possible concerns. However, Ramsarup is able to pass on increases in raw materials to its customers.

Ramsarup Industries has earmarked Rs 130 crore for an expansion in the power transmission line business and its wire production segment. While a total business of Rs 750 crore is expected in the transmission line segment during the next fiscal, the wire expansion project is expected to yield around Rs 250 crore to the top line of the company and Rs 25 crore to the bottom line. The company is in the process of acquiring 40 acres of land in West Bengal for the project.

Ramsarup Industries is mainly into the manufacture of steel wires and TMT bars, which it supplies to the power and infrastructure sector. The company also has backward integration, with its production of 7,00,000 MTPA integrated steel plant to produce steel billets and 20 MW power at Kharagpur.