CRISIL 'A-' & 'P2+' for Gloster Jute Mills' bank facilities

31 Mar '09

2 min read

CRISIL has assigned ratings of 'A-/Stable/P2+' to the various bank facilities of Gloster Jute Mills Ltd (Gloster). The ratings are supported by Gloster's diversified product profile and average financial risk profile. These rating strengths are, however, partly mitigated by Gloster's substantial presence in the overseas market which may put pressure on operating margins coupled with its exposure to risks relating to the regulated nature of the jute industry.

Rs.161.5 mn Term Loans -- A-/Stable (Assigned)
Rs.210 mn Cash Credit* -- A-/Stable (Assigned)
Rs.70 mn Foreign Bill Discounting -- P2+ (Assigned)
Rs.90 mn Letter of Credit -- P2+ (Assigned)
Rs.41.5 mn Bank Guarantee -- P2+ (Assigned
* Rs.100 million interchangeable with EPC.

Outlook: Stable
CRISIL believes that Gloster will maintain a stable business risk profile over the medium term, despite significant presence in the overseas market, on account of focus on value-added products. The financial profile is expected to remain steady, driven by healthy accruals and comfortable gearing and debt protection ratios. The outlook may be revised to 'Positive' if sustained improvement in profitability and accruals leads to a significant improvement in financial profile for Gloster. Conversely, a significant increase in debt owing to capital expenditure and acquisitions or decline in profitability on account of slower demand and pricing power, particularly in the global markets, may drive a revision in outlook to 'Negative'.

Incorporated in 1992, Gloster manufactures jute and jute products. Its factory is at Howrah (West Bengal).The company produces jute bags, geo-textiles, jute carpets, jute yarn, non-woven jute felts, hydrocarbon-free jute bags, and other value-added products.

CRISIL

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