Rating agency Crisil has suspended the rating of the Commercial Paper of Orient Abrasives because of “non-cooperation” by the company.
“Despite repeated requests by Crisil, Orient Abrasives is yet to provide adequate information to enable Crisil to assess OAL’s ability to service its debt,” the rating agency says in a press release.
Not sharing Information
It says the suspension reflects Crisil’s inability to maintain a valid rating “in the absence of adequate information.” Crisil also notes that “non-sharing of information is the first signal of possible credit distress.”
Orient Abrasives produces fused aluminium oxide abrasive grains. For 2011-12, it achieved a turnover of Rs 167.78 crore and made a net profit of Rs 9.16 crore. Each share, of face value of Re 1, earned Rs 0.76. For the first quarter of the current year, the company reported turnover of Rs 42 crore and net profit of Rs 2.85 crore. Net profit margin improved to 6.82 per cent for the quarter, from 5.45 per cent for 2011-12. On the BSE today, the share (of face value of Re 1) closed at Rs 7.80.
The company’s Annual Report for 2011-12 reveals reduction in debt levels — both long-term and short-term — as well as interest charges. To what extent this could be attributed to the de-merger of the refractory business, which was spun off in April 2011, into Orient Refractories Ltd, is not clear, as the Annual Report does not give a break-up of ‘current liabilities’ transferred to Orient Refractories.
Outlook glum as mines deplete
“The availability of abrasive grade bauxite (the key raw material) is a matter of concern,” the Annual Report says. “The reserves in our mines are depleting. The company is making efforts to get more mining leases. Efforts are also underway to import the raw material,” it says.