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Wednesday, Apr 17, 2002

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CARE begins construction sector grading -- McNally Bharat rated `high'

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MUMBAI, April 16

CARE has launched gradings for construction entities and has completed its first grading assignment for McNally Bharat Engineering Company Ltd (MBEL), which has been assigned a `CCt2+' grading, indicating that the project execution capabilities of the entity are high.

Grading for the construction sector would be in the nature of performance rating, as distinct from credit rating, said a news release from the agency.

Grading would be an opinion on the ability of the respective entity to carry out the stated objectives within a specified time frame. The exercise involves an evaluation of business and financial risks facing each entity, said the release.

This kind of grading would facilitate the short-listing and selection of quality players who can get empanelled with the Government departments as well aid potential investors in making an objective assessment of the sector, thus enabling an increased flow of funds to the construction sector, said the release.

The grading process would also help in reducing the time involved in tendering/bidding, as the project developer may invite bids only from the short-listed entities, said CARE. The construction sector has been divided into four broad categories for the grading process — they are Project Developer, Project Consultant, Construction Contractor and the Project. The gradings will be assigned on a scale of 1 to 5 with specified symbols for each of the above categories, the construction contractors, for example, being graded on a scale from `CCt1' to `CCt5'.

In the case of MBEL, an integrated project management company in India, the grading has factored in the long track record of the company, its experienced management, proven project execution capability, satisfactory order book position, unsatisfactory performance of its product division, low margins and moderate financial condition, said CARE.

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