Apollo Hospitals's NCD gets AA minus

THE CREDIT Rating Information Services of India (Crisil) has assigned AA minus to the Rs. 10 crore non-convertible debenture issue and FAA plus to the fixed deposit programme of Apollo Hospitals Enterprises (AHEL). The rating reflects the company's established track record and strong brand name in the medical services business, strong cash flows from its existing hospitals and pharmacy operations and the company's conservative capital structure. The rating also positively factors in the growth prospects of the health care sector given increased patient affordability and opening up of health insurance coupled with Apollo's own financially conservative growth plans. The rating is however constrained by the increased competition in the tertiary care sector and the expected low returns on the company's recent investments.

Crisil had an outstanding rating of A plus on the Rs. 10 crore NCD issue and a FAA on the fixed deposit programme of Indian Hospital Corporation (IHCL). Upon the merger of IHCL into AHEL with effect from April 1, 1999, IHCL's rated debt was transferred to the books of AHEL and the ratings on IHCL's borrowings stand extinguished.

AHEL is a Chennai-based healthcare conglomerate, promoted by Dr. Prathap Reddy, with interests in hospitals, pharmacies and project consulting. The company at present owns 11 hospitals with a capacity close to 2,500 beds besides having management contracts with non-Apollo Hospitals for another 1,000 beds. AHEL also runs a chain of pharmacies and has a consultancy division which provides service by way of implementation and management of multi-specialty hospitals. For the nine months ended December 31, 2000, AHEL reported a PAT of Rs. 20.60 crores on revenues of Rs. 234 crores.

Kirloskar Brothers

The FA plus rating assigned to the fixed deposit programme of Kirloskar Brothers (KBL) has been reaffirmed.

The rating continues to reflect the company's dominant market position in the domestic pumps market, its strong brand equity, a wide distribution network, and its proven capabilities in the turnkey project execution segment.

The rating also factors in the improving financial risk profile of the company as reflected by steady margins, accruals and interest coverage ratios over the last two years. The rating is, however, constrained by the high degree of competition in the agricultural and domestic pump segment, the company's working capital intensive nature of operations, its large exposure to group companies and its moderate capital structure.

KBL is engaged in the manufacture and sale of industrial, agricultural and domestic pumps to the domestic and overseas markets. The company also undertakes turnkey project execution for various irrigation projects and other large industrial applications. In addition, the company undertakes the manufacture and sale of valves and anti-corrosion products in a small way.

India Nippon

The outstanding FAAA (F triple A) rating assigned to the fixed deposit programme of India Nippon Electricals (INEL) has been reaffirmed.

The rating reflects INEL's strong business position in two wheeler electronic ignition systems (EIS), its above average operating efficiencies, its favourable financial risk profile and the financial and managerial support available to it from the TVS group. The rating also factors in INEL's heavy dependence on the OEM segment of the two wheeler market, in general, and TVS Suzuki, in particular, and the effects of the increasing competition in the two wheeler market.

INEL is engaged in the manufacture of electronic ignition systems (EIS) for two/ three wheelers, portable generator sets and general purpose engines.

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