Philips India's instrument gets P1 plus

THE CREDIT Rating Information Services of India (Crisil) has assigned P1 plus rating to the Rs. 90 crore short term debt programme of Philips India (PIL). The rating reflects the continued support to PIL from its parent, Koninklijke Philips Electronics NV (Rated A-/ Stable by Standard & Poor's) as reflected through the proposed increase in the equity stake through an open offer, the company's diversified market presence, its market position in the lighting business and Philips' established brand name in the Indian market.

The rating is, however, constrained by the deterioration in the risk profile of the company's consumer electronics (CE) business due to declining market share and margins. This will result in continued strain on the company's overall financial risk profile in the near to medium term, as reflected in its declining profitability and weak coverage ratios.

The rating, however, continues to factor in the PIL's comfortable capital structure and expected sustenance of its comfortable liquidity position. The company's ability to successfully regain its market position in the CE business through aggressive strategies and rapid new product introductions would be critical for its future risk profile.

Philips India (PIL), a 51 per cent subsidiary of Koninklijke Philips Electronics NV (PENV) of the Netherlands, is engaged in the manufacture and sale of CTVs, audio products, electrical lamps, lighting fittings and accessories, medical apparatus, domestic appliances and electronic components.

During October 2000, PENV has made an open offer to the minority stake holders in PIL to acquire additional stake at Rs. 105 per share to enhance its shareholding to 74 per cent, reflecting the parent's commitment to the Indian entity.

For the year ended December 31, 1999, the company reported a profit after tax (PAT) of Rs. 28.13 crores on a net sales of Rs. 1,698.75 crores. However, during the first nine months of the current year, the company has reported a loss of Rs. 19.40 crores on a net sales of Rs. 1,095.32 crores.

Corporate Bureau

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