Credit rating agency, Credit Analysis & Research (CARE) has revised rating of Emco’s long term bank facilities worth Rs 369.40 crore to ‘B’ from ‘BB+’. Further, the rating agency has also revised rating of company’s short term bank facilities worth Rs 1350 lakh to ‘A4’ from ‘A4+’.
The revision in the ratings assigned to the bank facilities of EMCO factors in weak liquidity position due to the stretched working capital cycle on account of high collection period. The rating action also factors in low profitability margin during FY14 (refers to the period April 01 to March 31). Furthermore, the revised ratings take into consideration high leverage ratios and large exposure to loss making subsidiaries (via corporate guarantees and loans & advances).
