Moneycontrol PRO
Upcoming Webinar:Join us for 'The Future Techshot' on Sept 22, 10:30am to gain insights into role of tech in streamlining businesses. Register Now!

Fitch revises Chemplast Sanmar's outlook to stable

Fitch Ratings has revised India-based Chemplast Sanmar Limited's (CSL) Outlook to Stable from Negative. Its National Long-Term rating has been affirmed at 'Fitch BBB-(ind)'. CSL's additional INR1.54bn non-fund based working capital facility has been assigned a 'Fitch A3(ind)' rating.

September 08, 2011 / 11:06 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Fitch Ratings has revised India-based Chemplast Sanmar Limited's (CSL) Outlook to Stable from Negative. Its National Long-Term rating has been affirmed at 'Fitch BBB-(ind)'. CSL's additional INR1.54bn non-fund based working capital facility has been assigned a 'Fitch A3(ind)' rating.


Fitch Ratings-Chennai/Singapore-07 September 2011: Fitch Ratings has revised India-based Chemplast Sanmar Limited's (CSL) Outlook to Stable from Negative. Its National Long-Term rating has been affirmed at 'Fitch BBB-(ind)'. CSL's additional INR1.54bn non-fund based working capital facility has been assigned a 'Fitch A3(ind)' rating. A list of the company's outstanding bank loan ratings (including the above) is provided at the end of the commentary.
The affirmation and the Outlook revision reflect CSL's improved operational and financial performance during FY11-Q1FY12, due to a significant and sustained improvement in its capacity utilization and revenues. EBIDTA margins also showed a sustained improvement to above 10% from Q2FY11 onwards. Fitch notes that CSL's established relationships with its bankers and raw material suppliers have helped it service its debt obligations in a timely manner.
The ratings remain constrained by CSL's commoditized business, which makes it vulnerable to price volatility in both feedstock and finished products. Also, the company has extended a standby credit line, for up to USD35m, to TCI Sanmar (the Sanmar Group's Egyptian unit) for potential project overruns and debt servicing.


A positive rating action may result from a sustained reduction in CSL's financial leverage (net debt including guarantees/EBITDA) to below 3.5x. Conversely, the company's interest coverage falling below 1.0x, or a sustained deterioration in its financial leverage to above 6x, may affect the rating adversely.


CSL is a PVC manufacturer with a capacity of 290,000 metric tons per annum. FY11 was the first full year of its expanded PVC facility. The company forms a part of the Sanmar Group, which has interests in chemicals, shipping and engineering. In FY11, CSL reported revenue of INR19.21bn (FY10: INR9.84bn), EBIDTA of INR1.76bn (FY10: INR0.65bn), EBITDA margin of 9.2% (FY10: 6.7%), interest coverage of 1.10x (FY10: 0.52x) and financial leverage was 6.58x (FY10: 18.79x). For Q1FY12, its revenue was INR5.02bn, EBIDTA was INR0.67bn, interest coverage was 1.60x and leverage (annualized) was 3.46x.


CSL's outstanding ratings are as follows:
- INR9.31bn long-term bank loans: 'Fitch BBB-(ind)'
- INR1.39bn secured fund-based lines of credit: 'Fitch BBB-(ind)'
- INR8.71bn secured non-fund based lines of credit: 'Fitch A3(ind)'


FIIs holding more than 30% in Indian cos


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment 

first published: Sep 8, 2011 10:52 am

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark