CRISIL assigns AA- to Eimco’s Rs 12 cr cash credit limits
CRISIL has assigned AA-/Stable to Eimco Elecon (India)’s Rs 12 crore cash credit limits, P1+ to Rs 5 crore short-term loan and Rs 33 crore to letter of credit limit.
By INDIATIMES NEWS NETWORK |
MUMBAI: CRISIL has assigned AA-/Stable to Eimco Elecon (India)’s Rs 12 crore cash credit limits, P1+ to Rs 5 crore short-term loan and Rs 33 crore to letter of credit limit. At the same time, the rating agency has reaffirmed Eimco’s Rs 17 crore commercial paper programme P1+ and Rs 5 crore non-convertible debentures AA-/Stable.
The ratings continue to reflect Eimco Elecon's comfortable financial risk profile, dominance in the domestic underground coal mining equipment industry, and the technological support it receives through foreign collaborations.
These rating strengths are partially offset by Eimco Elecon's heavy dependence on Coal India Ltd for revenues and the working-capital-intensive nature of its business.
Eimco Elecon has a sound financial risk profile. It has a comfortable capital structure with a gearing of 0.25 times as on March 31, 2007.
The company’s 2006-07 (Apr-Mar) operating and net margins were robust at 24 per cent and 9 per cent, respectively. Debt protection ratios were strong with an interest cover of 7.2 times and net cash accruals to total debt ratio of 59 per cent.
According to CRISIL's estimates, Eimco Elecon will maintain its financial risk profile over the medium term because of its limited capital expenditure requirements, expected healthy topline growth, and high profitability.
CRISIL believes Eimco Elecon will continue to dominate the underground mining equipment segment and maintain strong operating and net margins. The company's gearing and debt protection ratios are likely to improve over the medium term, owing to repayment of debt and negligible capital expenditure.
The outlook may be revised to 'positive' if Eimco Elecon's entry into the open-cast mining and wheel loader segments is successful, leading to a healthy increase in revenues and diversification of client base.
Conversely, the outlook may be revised to 'negative' if there is sustained de-growth in revenues over the medium term, or if Eimco Elecon materially enhances its exposure to group companies.
The ratings continue to reflect Eimco Elecon's comfortable financial risk profile, dominance in the domestic underground coal mining equipment industry, and the technological support it receives through foreign collaborations.
These rating strengths are partially offset by Eimco Elecon's heavy dependence on Coal India Ltd for revenues and the working-capital-intensive nature of its business.
Eimco Elecon has a sound financial risk profile. It has a comfortable capital structure with a gearing of 0.25 times as on March 31, 2007.
The company’s 2006-07 (Apr-Mar) operating and net margins were robust at 24 per cent and 9 per cent, respectively. Debt protection ratios were strong with an interest cover of 7.2 times and net cash accruals to total debt ratio of 59 per cent.
According to CRISIL's estimates, Eimco Elecon will maintain its financial risk profile over the medium term because of its limited capital expenditure requirements, expected healthy topline growth, and high profitability.
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CRISIL believes Eimco Elecon will continue to dominate the underground mining equipment segment and maintain strong operating and net margins. The company's gearing and debt protection ratios are likely to improve over the medium term, owing to repayment of debt and negligible capital expenditure.
The outlook may be revised to 'positive' if Eimco Elecon's entry into the open-cast mining and wheel loader segments is successful, leading to a healthy increase in revenues and diversification of client base.
Conversely, the outlook may be revised to 'negative' if there is sustained de-growth in revenues over the medium term, or if Eimco Elecon materially enhances its exposure to group companies.
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