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-Bengal Energy INR3bn debt gets BBB- from CARE.

BANKING AND CREDIT NEWS-November 2, 2010--Bengal Energy INR3bn debt gets BBB- from CARE(C)2010 M2 COMMUNICATIONS

2 November 2010 - CARE on Monday assigned its BBB- rating to the INR3bn long-term bank facilities of Bengal Energy Ltd.

The agency issued the following press release:

Facilities Amount (Rs. crore) Ratings1 Remarks

Long-term Bank Facilities 300.0 'CARE BBB-' (Triple B Minus) Assigned

Total Facilities 300.0

Rating Rationale

The aforesaid rating draws strength from considerable experience of the promoters in the coke industry, successful implementation of the low ash metallurgical coke project, satisfactory capacity utilization and profitability in the first year of operation and proposed backward integration initiative.

The rating is however, constrained by short track record, high gearing ratios, volatility in raw materials & finished goods prices and major dependence on fortunes of the steel industry. The rating also factors in pollution hazardness of the industry.

Successful commissioning of the waste heat recovery boiler plant project & stabilization in operation and ability to maintain its performance in the wake of volatility in raw material & finished goods prices will remain the key rating sensitivities.

Company Profile

Bengal Energy Ltd. (BEL), incorporated in May, 2007, is promoted by Shri Om Jalan of Kolkata along with Shri Rajeev Maheshwari and Shri Navin Maheshwari. The company is engaged in producing Low Ash Metallurgical Coke at its factory at Dauka, Midnapore, West Bengal with an installed capacity of 6,00,000 MTPA, with FY10 being the first year of operation. As a backward integration move, the company acquired a coal mine in Australia in FY10 through one of its subsidiary, Bengal Coal Pty Ltd.

In FY10, the company earned PBILDT and PAT (after deferred tax) of Rs.85.0 crore and Rs.33.0 crore respectively, on net sales of Rs.430.0 crore. Profit margins were comfortable. Long term debt equity and overall gearing ratios were high as on Mar. 31, 2010.

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Publication:M2 Banking & Credit News (BCN)
Date:Nov 2, 2010
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