The downgrade reflected ASAL's operating performance during the first six months of fiscal 2020, CRISIL said.
Automotive Stampings and Assemblies (ASAL) share price fell 5 percent intraday on January 6 after a rating downgrade by CRISIL.
The stock has fallen more than 57 percent in the last year. It was quoting at Rs 33.35, down Rs 1.85, or 5.26 percent, on the BSE at 1133 hours.
CRISIL downgraded the company's long-term borrowings rating to BBB- from BBB but raised the outlook to stable from negative, the company said in its BSE filing. It downgraded the short-term borrowings to A3 from A3+, the company said.
"The downgrade reflects ASAL's operating performance during the first six months of fiscal 2020, resulting in operating losses and a 14 percent year-on-year decline in revenue. Lower offtake from key customers -- Tata Motors, Fiat India Automobiles and weak automobile demand may further lead to about 20 percent drop in revenue in fiscal 2020 along with continued weak profitability," the rating agency said.
The downside impact on profitability and cash losses were arrested due to cost reduction initiatives and profit derived from the sale of non-core assets, it added.
CRISIL said the losses were likely to be compensated through release from working capital due to lower revenue, incremental support from the parent, Tata Autocomp Systems and cash inflows from the sale of assets.
According to the rating agency, new orders may lead to better revenue flow from fiscal 2021, thereby improving the scale and absorption of fixed costs.
"Further, stabilisation of new programmes and steady growth in revenue should increase the operating margin over the medium term. Capital expenditure for the new orders to be executed during fiscal 2021 will be funded through debt and cash accrual. The lower-than-expected ramp-up in scale and profitability may further increase debt levels and hence will be closely monitored," it said.CRISIL said the ratings reflected strong business and financial support ASAL receives from Tata Motors and TACO.
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