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CRISIL rates Swastik Refinery's bank facilities at B+/P4.

BANKING AND CREDIT NEWS-29 March 2010-CRISIL rates Swastik Refinery's bank facilities at B+/P4(C)1994-2010 M2 COMMUNICATIONS

29 March 2010 - Indian credit rating agency rated at B+ with a "stable" outlook and at P4 various bank facilities of local edible oil maker Swastik Refinery Pvt Ltd.

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of Swastik Refinery and Sree Vegetables Oil Pvt Ltd (Sree Vegetables). This is because the companies, collectively referred to, herein, as the Swastik Refinery group, are in the same line of business, under a common management team and have fungible cash flows between them.

The ratings reflect the Swastik Refinery group's below-average financial risk profile, marked by small net worth and weak debt protection metrics, and exposure to risks related to the commodity nature of, and intense competition in, the vanaspati industry, and to unfavourable regulatory changes. These rating weaknesses are partially offset by the group's moderate operating efficiency.

CRISIL believes that the Swastik Refinery group will benefit from its recently expanded facilities. The agency may revise the outlook to "positive" in case the group achieves more-than-expected profitable growth. Conversely, it may revise it to "negative" if the group's operating margin deteriorates steeply, or its gearing increases to higher-than-expected levels, leading to deterioration in its financial risk profile.

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Publication:M2 Banking & Credit News (BCN)
Date:Mar 29, 2010
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