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-CRISIL downgrades Sainsons Pulp & Papers ratings.

M2 EQUITYBITES-October 22, 2010--CRISIL downgrades Sainsons Pulp & Papers ratings(C)2010 M2 COMMUNICATIONS

22 October 2010 - CRISIL yesterday lowered its ratings on the bank facilities of Sainsons Pulp & Papers Ltd to D/P5 from B+/negative/P4.

The agency issued the following press release:

Rs.60 Million Cash Credit Limit D (Downgraded from 'B+/Negative')

Rs.322.5 Million Term Loan D (Downgraded from 'B+/Negative')

Rs.100 Million Letter of Credit P5 (Downgraded from 'P4')

Rs.27 Million Bank Guarantee P5 (Downgraded from 'P4')

CRISIL has downgraded its ratings on Sainsons Pulp & Papers Ltd's (SPPL's) bank facilities to 'D/P5' from 'B+/Negative/P4. The downgrade reflects SPPL's inability to meet its term debt obligation due to weak liquidity, resulting from the delay in stabilisation of its project.

SPPL has a weak financial risk profile, marked by high gearing, weak debt protection metrics, and large working capital requirements. These rating weaknesses are partially offset by SPPL's promoter's experience in the paper industry.

About the Company

SPPL was incorporated in 2005 for setting up a waste-paper-based writing and printing paper mill, with its facility located at Taliwal-Nichla in the Una district of Himachal Pradesh. The company is promoted by Mr. Ramesh Kumar Saini, who has more than 18 years of experience in the paper industry. SPPL has undertaken an aggressive debt-funded capital expenditure programme to set up a manufacturing facility with a capacity 200 tonnes per day. The total project cost is Rs.1.06 billion, funded in a debt-to-equity mix of 70:30.

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Publication:M2 EquityBites (EQB)
Date:Oct 22, 2010
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