RIL's instruments get triple A from Crisil

THE CREDIT Rating Information Services of India (Crisil) has assigned a AAA (triple A) rating to Reliance Industries' proposed Rs. 150 crore non-convertible debenture issue, the Rs. 400 crore floating rate bonds and the Rs. 700 crore zero coupon bonds issue (enhanced from Rs. 400 crores).

The rating reflects RIL's dominant market position and cost competitiveness in the domestic polymer, polyester, and fibre- intermediate industries. It also factors in the company's above- average profitability, comfortable net-gearing level, comfortable interest coverage ratios, strong cash flows, and a high degree of financial flexibility derived from significant funds deployed in liquid assets.

Further, the management's experience and track record in the creation of capacities, project implementation skills, and use of innovative financing are favourably factored in the rating. The above strengths are partly offset by the cyclical nature of petrochemical business. The global petrochemicals industry went through a downturn over the past 2-3 years. However, RIL's margins have not been affected adversely in the past due to the group's well-integrated operations.

Further, the petrochemical product prices (polymers, polyester and fibre intermediates) have increased over the past 10-12 months, though the benefit of higher realisations has been offset by a corresponding increase in feedstock prices. During 1999- 2000, the company has made an additional investment of Rs. 600 crores in its affiliate Reliance Petroleum. The future financial flexibility would be linked to the extent of investment in other businesses.

RIL is the largest and highly integrated manufacturer of polymers (PE, PP, and PVC), polyester fibres and yarn (PSF and PFY), fibre intermediates (PTA and MEG), other industrial chemicals, textiles, oil, and natural gas in the country. Further, the company is among the top 10 global producers of PE, top 6 global producers in PSF and PFY, and top 5 global producers in PTA. The manufacturing facilities of the company are located at Hazira (Gujarat), Patalganga (Maharashtra), and Naroda (Gujarat).

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Section  : Business
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