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ICRA assigns ‘LBB+’ rating to Stone India’s term loan facilities

04 Jan 2012

Credit rating agency, ICRA has assigned LBB+ rating to Rs 280 crore term loan and Rs 20 crore cash credit facility of Stone India (SIL). The outlook on this rating is stable. ICRA has also assigned an A4+ rating to Rs 8 crore short term non fund based facility of the company.

The ratings reflect significant customer concentration risk being faced by the company with the Indian Railways (IR) accounting for more than 80% of the company`s sales, the exposure of SIL to raw material price risk, with the orders from IR being fixed price in nature, thus not allowing the company to pass on cost increases, the practice of the IR to award a majority of orders to the lowest bidder, thus driving down the profitability of such contracts and the high working capital requirements of the company which results in almost full utilization of the company`s working capital limits, reducing financial flexibility.

Stone India, a multi-product engineering company located in Kolkata, has been serving the Indian rail road industry for over seven decades now. A pioneer in brake systems and train lighting alternators is the undisputed leader in locomotive brake systems and has a wide range of mechanical and electrical products for the rail road industry.

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Puchho Befikar
SEBI Registered: Investment Adviser - INA000013323