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-ICRA cuts to D ratings on bank loans of JP Foil.

M2 EQUITYBITES-December 22, 2011--ICRA cuts to D ratings on bank loans of JP Foil(C)2011 M2 COMMUNICATIONS

22 December 2011 - ICRA has lowered to D its ratings on the INR360m (USD6.8m/EUR5.2m) term loans, INR220m fund based limits and INR150m non-fund based limits of Indian foil maker JP Foil Ltd from LB+, LB+ and A4, respectively.

The move reflects the time and cost overruns in the company's newly-set up greenfield aluminium foil plant in the state of Gujarat. The repayment of debt coincides with the scheduled start of operation, resulting in low moratorium period and liquidity pressures. The limited experience of JP Foil's promoters in the aluminium foil industry and the susceptibility of project returns to raw material prices also weaken the ratings.

Yet, the ratings benefit from the expected growth in demand in the foil industry, JP Foil's presence in value-added segments like lacquering and embossing and the low funding risk as the company has obtained most of the equity and debt for the project.

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Publication:M2 EquityBites (EQB)
Date:Dec 22, 2011
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