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-ICRA gives A4 to Tijiya Engineering bank facilities.

BANKING AND CREDIT NEWS-September 23, 2010--ICRA gives A4 to Tijiya Engineering bank facilities(C)2010 M2 COMMUNICATIONS

23 September 2010 a[euro]" ICRA said it set an A4 rating to the INR100m (USD2.2m/EUR1.6m) fund-based bank limits - packing credit and bills discounting - and INR4m non-fund-based bank limits of Tijiya Engineering Private Ltd (TEPL).

TEPL is primarily engaged in the manufacturing of mild steel products like brab arm, non-alloy steel rod, tension bar etc.

The agency also assigned an LBB- rating to the company's INR10m fund-based bank limits - cash credit as a sublimit of packing credit - of the company.

The outlook on the long-term rating is "stable".

The ratings factor in TEPL's weak financial position reflected by low profitability and depressed coverage indicators, small scale of operations, exposure of profits to fluctuations in the raw material prices, high dependence on export incentives, the company's highly competitive business environment, exposure to exchange rate risk, although moderated to an extent by hedging policies, and high counterparty risks as TEPL exports goods on a collection basis. The ratings also take note of the high working capital intensity of the business which exerts pressure on the liquidity position of the company.

The ratings also take into account the experience of the promoters in the steel industry, established client base which helps in procuring repeat orders and a favourable demand outlook of the steel industry in the near term.

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Publication:M2 Banking & Credit News (BCN)
Date:Sep 23, 2010
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