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Lr - Loan Rating; ST Short Term. * Due to its revolving nature, CRAB views Cash Credit (CC) as long-term facility.
** L/C limit of Sonali Bank Ltd. BDT 1000 million with inner limit of LTR BDT 400 million.
Date of Rating: 2 June 2011 Validity: The Long Term ratings are valid up to 31 December 2011 and the Short Term ratings are valid up to limit expiry date of respective credit facilities or 31 December 2011 whichever is earlier. Rating Based on: Audited financial statements up to 30 June 2010, bank liability position as on 31 March 2011, and other relevant quantitative as well as qualitative information up to the date of rating declaration. Methodology: CRABs Corporate Rating Methodology (www.crab.com.bd) Analysts: Munir Uddin Ahmed munir@crab.com.bd Mohammad Aiyub Khan aiyub@crab.com.bd mab@crab.com.bd Credit Rating Agen Rationale Credit Rating Agency of Bangladesh Limited (CRAB) has assigned A1 (Pronounced Single A One) rating in the Long Term to Ratanpur Steel Re-Rolling Mills Limited (hereinafter also referred to as RSRM or the Company) and A1 (Lr) to BDT 149.96 million Long Term Outstanding (LTO) and BDT 1,700.00 million aggregate Cash Credit of the Company. CRAB has also assigned ST-2 rating to BDT 2,800.0 million aggregate Funded and Non-funded limit. CRAB has performed the present rating assignment based on audited financial statements of June 2008 to June 2010 and other relevant information. The rating also takes into account business profile, past record and trend of operating performance, balance sheet strength and loan repayment history. In assessing, the Loan Ratings (Lr) CRAB also considers the security arrangements against each exposure along with the entitys fundamentals. RSRM is engaged in manufacturing different graded size (5.5 mm to 32 mm) from 1986. RSRM has opened Ratanpur Ship Yard Unit in1995, which was engaged in ship breaking. Initially production capacity of RSRM was 50,000 MT/ per year, which was increased to 192,000 MT per year in FY 08-09 and sharp utilization growth of in production business, capacity of scale the of Company, is in increasing trend. Rating reflects the moderate operation along with high competition intensity, its improved EBITDA margin and managing of price volatility at raw material procurement. The ratings also reflect the agencys assessment of the moderate operation as well as experience of the Companys promoters alongside accomplishment. its profitable records of (40, 60 and 75 grades) deformed rods in different
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Steel Industry
Please see
The equity of the Company has increased from BDT 707.1 million in FY 07-08 to BDT 1,467.2 million in FY 09-10 due to equity infusion. However, the debt of the Company has increased from BDT 342.4 million in FY 07-08 to BDT 1,373.6 million in FY 09-10 as it made capital investment and reopens its Ship Yard Unit in FY08-09 and along with enhancement of working capital limit. Therefore, debt to equity ratio has increased from 0.5 in FY07-08 to 1.1 in FY 09-10. The rating also supported by the growing demand prevailing in the construction and real estate sector, thus sustaining capacity utilization, but any constraint imposed to this sector may hamper Companys growth. Total revenue of the Company stood at BDT 6,073.7 million in FY09-10, increasing from BDT 814.2 million in FY07-08. The Net Profit after Tax was BDT 397.8 million in FY09-10, which was BDT 20.7 million in FY07-08. The sales trend shows a consistent and gradually increasing growth in year to year. Therefore, CAGR of sales and EBITDA was 173.1% and 316.4% respectively during FY07-08 to FY09-10. Increasing of raw material cost, factory overhead, general expenses & financial expenses contributed to the fall in EBITDA margin from 11.2% to 9.8% from FY08-09 to FY09-10. Utilization of capacity is increasing trend in year to year. Moderate operating profitability coupled with debt repayment translated into improvement in RSRMs borrowed fund/EBITDA from 9.9x in FY07-08 to 2.3x in FY09-10. Key Rating Drivers: An increase in capacity utilization and/or introducing backward linkage facility (reopen Ship Yard Unit) and/or reduced Borrowed Fund to EBITDA 9.9x in FY07-08 to 2.3x in FY09-10 and/or increased Operating Profit Margin 4.23% in FY07-08 to 8.65% in FY09-10 and/or any positive changes in operation, could be a positive rating factor. Unstable energy source, labor unrest along with increased Debt to Equity 0.5x in FY07-08 to 1.1x in FY09-10 and/or liabilities Ship Yard Unit and/or inefficiency working capital management, disparity between growth potentiality and exposure to debt led capital structure, could be a negative rating factor. LONG-TERM RATING: LOANS/FACILITIES FROM BANKS/FIS
www.crab.com.bd, www.crabrating.com
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*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
Copyright 2008, CREDIT RATING AGENCY OF BANGLADESH LIMITED ("CRAB"). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT CRABS PRIOR WRITTEN CONSENT. All information contained herein is obtained by CRAB from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided as is without warranty of any kind and CRAB, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall CRAB have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of CRAB or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if CRAB is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY CRAB IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling.
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