Coromandal Fertilisers' NCD gets AA

By Our Corporate Bureau

CHENNAI, AUG. 26. The Credit Rating and Information Services of India (Crisil) has assigned AA (double A) rating to the Rs. 50 crore non-convertible debenture issue of Coromandel Fertilisers (CFL). The AA (double A) rating assigned to the company's outstanding non convertible debenture programmes have been reaffirmed. The P1 plus rating assigned to the Rs. 70 crore commercial paper programme of CFL has also been re-affirmed.

The ratings reflect the company's strong financial position characterised by high profitability, favourable interest coverage, strong cash flow protection measures (like net cash accruals/total debt) and fairly comfortable capital structure. The ratings favourably take into account the strong operating efficiencies emanating primarily from integrated nature of operations and superior raw material handling facilities, and company's strong market presence in Andhra Pradesh and Orissa.

The ratings continue to factor in the support available from the Murugappa group and the close integration of CFL with the fertilizer division of EID Parry (India). The ratings are, however, constrained by the highly regulated nature of the fertiliser industry, increasing competitive pressures, high dependence on monsoons for fertilizer consumption, working capital intensive nature of operations (delays in subsidy receivables) and high import dependence.

CFL is engaged primarily in the manufacture of complex fertilizers namely 28:28:0, 14:35:14 and 20:20:0, and trading of SSP, imported DAP and MoP. CFL reported a net profit of Rs. 52.88 crores on an operating income of Rs. 604 crores for the year ended March 31, 2001.

NTPC

The Rs. 250 crore bond issue (with greenshoe option) of National Thermal Power Corporation (NTPC) has been assigned AAA (triple A) rating by Crisil. The FAAA (F triple A) rating assigned to the fixed deposit programme and the P1 plus (P one plus) rating assigned to the Rs. 250 crore commercial paper programme of the corporation have been re-affirmed.The ratings reflect the dominant position of NTPC in the domestic power generation industry as borne out by its ownership of around a fifth of the country's power generation assets. The company's favourable business risk profile also emanates from the low demand risk of the power generation sector, the company's track record of efficient operations and its competitive cost structure.

Complementing the company's business strengths is its solid financial profile characterised by high and stable operating margins, low gearing and favourable cash coverage ratios. These strengths are to an extent offset by the high and increasing level of debtors on account of the weak financial position of State electricity boards (SEBs) which are NTPC's main customers.

The recommendations of the Montek Singh Ahluwalia Committee on settlement of SEB dues, as and when implemented would have a critical bearing on the future credit profile of NTPC. While it continues to enjoy the benefits of a benign regulatory environment which allows NTPC to earn a reasonable return on equity on a cost plus basis, the impact of the recent moves by the Central Electricity Regulatory Commission (CERC) at tightening tariff norms remains to be seen.

NTPC, a 100 per cent Government owned company is engaged in the business of establishing and operating thermal power stations and selling power to SEBs. The company had an installed capacity of 19,495 MW as at March 31, 2001.

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