AAA for GE Shipping's NCD

THE CREDIT Rating Information Services of India (Crisil) has assigned AAA (triple A) rating to the Rs. 90 crore non- convertible debenture issue of the Great Eastern Shipping Co. (GE Shipping). Simultaneously, the AAA rating assigned to the various non-convertible debenture issues of the company has been reaffirmed. The pfAAA rating assigned to the Rs. 95 crore preference share programme of the company has also been reaffirmed.

The ratings reflect the company's strength on account of a diversified income stream arising from a fleet of ships catering to various segments of the industry as well as diverse geographies. This diversity coupled with a proactive and financially conservative management has helped the company sustain its profitability despite freight rate volatility in the past. The ratings also reflect the company's strong financial risk profile characterised by high profitability, moderate gearing level, high interest coverage and comfortable liquidity levels. Despite a Rs. 148 crore share buy-back programme implemented during 2000-01, the company's financial indicators continue to remain at the anticipated levels mainly due to the prevailing favourable business cycle.

Further, the company has also reduced its borrowing level during 2000-01. The rating agency expects the company to maintain its financial position over the medium term even after another proposed share buy-back programme (which is likely to aggregate to Rs. 100 crores) on account of expected healthy cash accruals. However, the company's ability to maintain and improve its capital structure to a more comfortable level over the next 2-3 years would remain an important rating sensitivity. The rating also factors in the key risks associated with the shipping industry, namely, high capital intensity, cyclicality and volatility of freight rates.

For the year ended March 31, 2001, GE Shipping reported a profit after tax of Rs. 177 crores on an operating income of Rs. 919 crores.

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Section  : Business
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