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India Ratings has upgraded Deccan Fine Chemicals long-term issuer rating to ‘IND BB’ from ‘IND D’. The outlook is stable.
The upgrade reflects a significant improvement in Deccan Fine’s debt servicing since January 2012. Debt servicing has been regular and timely, barring a few instances when there were delays due to operational issues, rather than lack of availability of funds to service debt.
The company has now put in place measures to ensure timely servicing of debt obligations without any operational delays. The company is also likely to obtain an enhancement in working capital limits, which will improve liquidity and reduce the instances of obtaining ad-hoc working capital limits, the rating firm has said.
The upgrade also reflects an improvement in Deccan Fine’s business and financial profile since January 2012 as production ramped up. This was because the company obtained product approvals for large-scale commercial production during 9MFY12. Subsequently, revenues increased. The increase in production has also improved EBIDTA margins to over 20 per cent during H1FY13 from 12.4 per cent in FY12.
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