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SPIC's NCD downgraded to default category

Our Bureau

MUMBAI, Oct. 27

THE rating agency CARE has downgraded the NCDs of Southern Petrochemical Industries Corporation Ltd's (SPIC) to default category.

The rating assigned to the outstanding Rs 100-crore NCD programme of the company has been downgraded to CARE D (default) from CARE A, a news release said.

The company's Rs 75-crore fixed deposit programme has also been downgraded to BB (FD). The rating is assigned to instruments considered speculative with inadequate protection for interest and principal payments, the release said.

The company primarily manufactures and trades fertilizers, apart from producing chloralkalies and penicillin-G and isa alos into providing engineering services.

As on March 31, 2000, SPIC had advanced Rs 565 crore as loans to group companies, none of which is expected to start commercial production in the next two years, the release said. The company's total exposure to group companies was Rs 883.80 crore, 48 pe r cent of SPIC's total capital employed.

As on March 31, 2000, SPIC's investments in its subsidiaries, various group companies and joint ventures amounted to Rs 318.80 crore.

The company's overall gearing has gone up to 3.72 in March 2000 against last year's 3.3 for the same period last year.

The increased outstanding fertilizer subsidy claims and delays in its release have forced SPIC to withdraw its working capital limits with the banks, which has resulted in interest liability.

The company has suffered losses of Rs 18.8 crore in the first quarter of this financial year (loss of Rs 8.8 crore last year) and Rs 12.2 crore in the second quarter (profit of Rs 32.10 crore) due to heavy interest burden.

SPIC has also hived off its heavy chemicals division to Tamilnadu Petroproducts Ltd. Only 30 per cent of the sale proceeds were paid upfront to the company instead of the entire lumpsum amount as earlier decided, the release said.

The company has defaulted on interest payments for its Series VII and on principal repayment for its Series VIII of its privately placed outstanding NCD of Rs 100 crore.

The company is currently negotiating with lenders and investors to reschedule its overall debt obligations, the release said.