Trivandrum: In what can be termed as a serious question mark on its credit worthiness, Credit Rating Information Services of India Limited (CRISIL), a leading ratings agency, has revoked the suspension of its rating on the bank facilities of Electronics Technology Park, Kerala (ETPK) or Technopark, Trivandrum, as it is more popularly known and has assigned its ‘CRISIL D’ rating to these facilities. CRISIL D Instruments with this rating are in default or are expected to be in default soon.
The CRISIL rating reflects instances of delay by ETPK in meeting its debt servicing obligations. The delay has been caused by the company’s weak liquidity. There has been delay in receipt of grant from the Government of Kerala (GoK), thereby adversely impacting its liquidity position. CRISIL believes that ETPK’s liquidity will remain weak in the near term.
ETPK has a healthy business risk profile supported by its established brand name and support from the GoK. However, the company’s financial risk profile is constrained due to large debt contracted for its on-going projects and weak liquidity.
As on date, ETPK has a debt of Rs.388.24 crores and is planning to draw another Rs. 205.14 crores as long-term bank loan. Both the total bank loan facilities (existing & proposed) amounting to Rs.593.38 crores have been rated CRISIL D. CRISIL had reviewed the rating in January 2014.
According to Sanjeev Kumar G, MD & Principal Financial Planner of Kochi based Progno Financial Planning Systems, “The low rating assigned to ETP-Kerala will increase the rate of interest on the loan and will adversely affect its cash flows. Compared to 2011-12, the financials improved in year 2012-13 as per the financial statements provided in Technopark website. It seems that the issues like delay in loan repayment that might have happened during the period April 2013 to December 2013, might have prompted CRISIL to downgrade the institution.”
“The CRISIL report points out the delay in receiving grant from Kerala Government. This should be read along with the recent Government treasury mismanagement issues”, he added.
Electronics Technology Park, Kerala, is an autonomous body under the Department of Information Technology of the Government of Kerala.
CRISIL, a Standard & Poor’s Company, is a global analytical firm providing ratings, research, and risk and policy advisory services.
Kerala IT News