Finolex's NCB gets AA minus

A AA minus (double A minus) rating has been assigned to the proposed Rs. 50 crore non-convertible debenture issue of Finolex Industries (FIL). A P1 plus (P one plus) rating has also been assigned to the proposed Rs. 60 crore commercial paper programme of FIL.

The rating primarily factors in the company's established position in the domestic polyvinyl chloride (PVC) resin industry - although the company's size is smaller compared to its major competitors. The rating also takes into account the company's leading position in the PVC pipes business, improvement in the financial risk profile as reflected by decline in gearing and better interest coverage ratios, and availability of adequate handling infrastructure at its plant for raw material imports. The income from the LPG handling facilities for BPCL also provides a support to the company's profits.

However, the rating is constrained by the company's non- integrated nature of operations, which makes its profitability susceptible to volatility in the international prices of PVC and raw materials. Further, the company's dependence on short-term borrowings and suppliers credit for raw material purchase has been high, which is expected to reduce. The extent of capital expenditure incurred by the company in future would govern the movement in the company's capital structure.

FIL is engaged in the manufacture of PVC resins and PVC pipes and is a part of the Pune based Finolex group which also includes Finolex Cables (outstanding Crisil long-term rating of AA plus).

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Section  : Business
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