Mumbai: Global credit rating agency Fitch on Tuesday said that it has downgraded Jain Irrigation Systems Ltd's (JISL) ratings and gave a negative outlook to the company on account of stretched liquidity position.
"Fitch Ratings has downgraded India-based Jain Irrigation Systems Ltd's (JISL) National Long-Term rating to 'Fitch BBB(ind)' from 'Fitch A(ind)'. The Outlook is Negative," the agency said in a statement.
The downgrade reflects JISL's stretched liquidity position as illustrated by the almost full utilisation (100 percent) of its fund-based limits in 2011-12 fiscal (end-March 2012), it added.
"This is on account of continued high standalone receivable days due to the delayed receipt of subsidy in JISL's micro-irrigation segment (around 50 percent of revenue) largely from the government of Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu (around 80 percent of the segment revenue)," it said.
According to the agency, JISL could not securitise its micro-irrigation segment receivables as the segment is classified as non-priority banking according to the Reserve Bank of India's (RBI) guidelines issued in August 2011.
That apart, the debt-funded capex and revaluation of foreign currency loans (around 31 percent of total debt as on end-March 2011) resulted in standalone debt levels increasing to Rs 28.3 billion in 2011-12 fiscal from Rs 22.1 billion in the 2010-11 fiscal, it added.
The Negative Outlook reflects potential refinancing risk, stemming from JISL's huge repayments lined up in FY'13 (Rs 4.6 billion) and FY'14 (Rs 3.7 billion) on a consolidated basis, Fitch said.
"The ratings, however, derive support from JISL's dominant position in micro-irrigation systems, strong brand image, well-diversified product portfolio, and its wide distribution network," it noted.
The ratings also reflect the company's strong relationships with farmers, fast accrual of benefits through flexible and scalable production facilities, and break-even in most of its overseas subsidiaries, it added.
JISL, one of the world's leading Micro irrigation systems provider, manufactures drip and sprinkler irrigation systems, besides agro-processed products like dehydrated vegetables and fruits.
Shares of the Jalgaon-based company Tuesday closed at Rs 72.10, down by 1.23 percent from its previous close at the BSE.
First Published: Tuesday, June 19, 2012, 21:11