Electrosteel Castings Ltd

• Partly convertible debentures - Rs. 45.1 crore Rating : upgraded from AA- to AA
• Non-convertible debentures - Rs. 15.2 crore Rating : upgraded from AA- to AA
• Commercial paper programme - Rs. 75 crore Rating : P1+ (enhanced from Rs. 50 crore)

Crisil has upraded the 'AA-' ratings it had assigned to the Rs.45.1 crore- and Rs. 15.2-crore non-convertible debenture programmes of Electrosteel Castings Ltd to 'AA'. It has also given a 'P1+' rating to Electrosteel Castings' Rs. 75-crore (enhanced from Rs. 50 crore) commercial paper programme.

The revision in rating is on account of the improved financial position of the company, strong cash accruals and size of operations that should help in meeting future financial requirements through internal accruals, the sustenance of its strong market position in the iron pipes business and strengths arising from its integrated multi-location operations. These strengths are, however, tempered by the relatively weak prospects of the cast iron pipes business, and risks characteristic of a projects-based business with high capital requirements (fixed assets and working capital), where the end customer is dependent on external funding source for execution of projects.

Electrosteel Castings is engaged primarily in the manufacture of ductile iron and cast iron spun pipes at its manufacturing facilities in Calcutta and Madras. These pipes are used mainly in transportation of water and sewage. At Ghaziabad, the company manufactures alloy steel grinding media used by grinding mills to crush a variety of materials.

In the first half of 1999-2000, the company reported a profit after tax of Rs. 43.2 crore on sales of Rs. 217.2 crore. DI pipes accounted for 50 per cent of total sales in 1998-99, and CI pipes for 46 per cent; the balance came from other sources, including the sale of alloy steel grinding media.