AA plus for Reliance Petroleum's NCD

THE CREDIT Rating Information Services of India (Crisil) has upgraded the rating (from AA to AA plus) assigned to the Rs. 1,000 crore Reliance Petroleum's non-convertible debentures. The upward revision factors in demonstrated operational performance on completion of the company's first full year of operations. Despite disruption in production due to the devastating earthquake in Gujarat, RPL has been able to achieve 95 per cent capacity utilisation.

Going forward, it is believed that the economies of scale arising from the large size of the company's operations, superior refinery configuration enabling a higher value added product slate and the various fiscal incentives available to the company should act as reasonable risk mitigants against the inherent volatility in the refining business. The proposed rationalisation of tariff structure as per ETG committee's recommendations would also provide additional cushion to the company's profitability and cashflows.

Given the company's proposed investment plans for setting up marketing infrastructure, which are subject to government approval, the company's gearing levels are likely to remain at more or less the current levels of around one time over the medium term. However, considering the long term tenor of the debt profile, cash coverage ratios are expected to remain healthy for the current rating levels. The high financial flexibility of the Reliance group continues to be a significant source of comfort in this context.

RPL is promoted by Reliance Industries (RIL), which is the flagship company of the Reliance group and presently the largest private sector industrial company in India in terms of gross assets. RPL has a 27 million tonne per annum (mtpa) grassroots refinery, which is the largest in India, at Jamnagar in Gujarat. During 2000-01, RPL reported a sales of Rs. 31,000 crores and profit after tax of Rs. 1460 crores.

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Section  : Business
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