ICRA downgrades ACC

MARCH 30: The Investment Information and Credit Rating agency (ICRA) has downgraded a string of non-convertible debenture programmes of th...

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MARCH 30: The Investment Information and Credit Rating agency (ICRA) has downgraded a string of non-convertible debenture programmes of the Associated Cement Companies Ltd (ACC), aggregating Rs 500 crore, to `LAA’ from `LAA+’.

"The downgrade of the long term rating reflects the deterioration in the operating and the financial performance of ACC due to a significant price erosion in its key markets, despite a strong overall consumption growth in the cement industry in 1999," a rating agency release issued in Mumbai on Thursday said.

"ACC is India’s leading cement maker. The downgrade of the long-term rating reflects the deterioration in ACC’s operating and financial performance due to a significant price erosion in its key markets. The `LAA’ rating reflects high safety. ICRA has, however, retained the `A1+’ rating, indicating highest safety, assigned to the Rs 300 crore commercial paper programme of ACC.

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Meanwhile, the Securities and Exchange Board of India (SEBI) has decided to put an end to the controversy over the appointment of Gujarat Ambuja Cement nominees on the board of ACC.

The controversy arose after Gujarat Ambuja Cement appointed its nominees on the board of ACC immediately after the former bought 7.2 per cent stake held by Tatas in ACC. Whether this appointment amounted to a change of management or not will now be explored by Sebi.

As per the SEBI takeover code, any negotiated sale of 15 per cent or above would trigger the code, making it mandatory for the buyer to give the same offer to public shareholders. Any acquisition below 15 per cent is considered to be an investment rather than an attempt to take-over the firm.

However, since Gujarat Ambuja Cement appointed theirnominees on ACC, after acquiring a nominal stake, there were demands from various investor organisations that it was aimed at taking over ACC.

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Meanwhile, ICRA has assigned the highest safety `A1′ rating to the Rs 5 crore CP programme of Narmada Chematur Petrochemicals Ltd and has reaffirmed the long-term `LAAA’ rating and the medium-term `MAAA’ rating assigned to the debt programmes of Power Finance Corporation.

The Credit Rating Information Services of India Ltd (Crisil) has reaffirmed the `P1+’ Rating assigned to the CP programme of Navneet Publication (India) Ltd.

The rating factors in the favourable financial risk profile of the company as characterised by high profitability, comfortable liquidity position and capital structure as well as its strong brand equidty and market position in the business of printing and publishing of educational aid books.

Crisil has also reaffirmed the `FA+’ rating assigned to the fixed deposit programme of Tamil Nadu Newsprint and Paper Ltd (TNPL).