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Our Bureau

Kolkata , Dec. 5

Crisil has reaffirmed AAA rating for Coal India Ltd's (CIL) long-term debt programme and P1+ for its short-term debt. This is the second consecutive year that CIL has achieved this feat.

Incidentally, Crisil has upgraded its rating on CIL's long-term debt programme from AA to AAA, the highest rating and reaffirmed its rating of the short-term debt programme as P1+ in 2005.

The present re-affirmation is an indication of CIL's high credit rating and reflects its strong financial risk profile and favourable business prospects — given India's burgeoning energy requirements. CIL contributes to about 84 per cent of coal produced in India. Its rating is also supported by its improving productivity, aided by its focus on outsourcing and mechanisation.

According to a CIL press release, the company's financial profile is marked by healthy cash accruals, low gearing and strong debt protection measures. The company had a low gearing of 0.2 times and strong debt protection measures, with net cash accruals to debt of 2.5 times as on March 31, 2006. This is despite the fact that the company supplies coal at a discount (on per energy unit basis) to landed cost of imported coal — a point acknowledged by Crisil in its rating release.

Crisil expects CIL to maintain its strong financial risk profile, healthy capital structure and sound debt protection measures on back of its robust cash accruals and low levels of debt. These factors are expected to help sustain the ratings at the current levels.

More Stories on : Credit Rating | Corporate Bonds | Coal

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