(ADPnews) - Sep 9, 2010 - CRISIL said Thursday it has revised its rating outlook on the long-term bank facilities of Rasoya Proteins Ltd (BOM:531522) to "stable" from "negative" and affirmed the rating at BB-.
The agency also assigned BB-/stable to Rasoya’s proposed long term bank facility.
The outlook revision reflects CRISIL’s belief that Rasoya’s topline will continue to increase steadily, as it did over the past four years, and its profitability will remain stable over the medium term, supported by increased revenues from its new capacities and incremental revenues from the power project. Rasoya’s topline grew at a compound annual growth rate (CAGR) of 40% and operating margin was in the range of 4.6% to 6% during the aforementioned period.
Rasoya’s steady topline growth and profitability are supported by progress made by the company in implementing its capacity expansion project and its reduced exposure to funding-related risks because of timely infusion of equity by promoters. The outlook revision also reflects the fact that Rasoya’s recently commissioned power division has benefited from the completion of the power transmission grid.
The ratings continue to reflect Rasoya’s exposure to intense market competition, susceptibility to volatility in soyabean prices, and below-average financial risk profile, which faces pressure form the company’s large, debt-funded capital expenditure (capex). These rating weaknesses are partially offset by Rasoya’s established market position, and strong operational efficiencies backed by its initiatives to vertically integrate its operations.
CRISIL believes that Rasoya will continue to benefit over the medium term from its established position in the soya market and its recent entry into power generation. The outlook may be revised to "positive", if Rasoya’s profitability improves because of timely inflow of revenues from its power division, leading to improvement in its profitability, and unhindered progress in implementation of its capacity expansion project. Conversely, the outlook may be revised to "negative", if there is any significant time or cost overrun in the company’s expansion project, there is a steep decline in its profitability, or if it contracts more-than-expected debt to fund its expansion project.
Rating agency website: www.crisil.com
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