BWI: Brickwork Ratings Assigns “BWR AA” for PTC India Financial Services Limited’s Non-Convertible Bonds Issue of INR 100 crore or INR 1 billion

Press release from Business Wire India
Source: Brickwork Ratings
Wednesday, September 09, 2009 03:01 PM IST (09:31 AM GMT)
Editors: General: Consumer interest, Economy; Business: Advertising, PR & marketing, Banking & financial services, Business services, Financial Analyst, Stock exchanges
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Brickwork Ratings Assigns "BWR AA" for PTC India Financial Services Limited's Non-Convertible Bonds Issue of INR 100 crore or INR 1 billion
Issue Rating: BWR AA ; Outlook: Stable

Bangalore, Karnataka, India, Wednesday, September 09, 2009 -- (Business Wire India) -- Brickwork Ratings has assigned BWR AA (Pronounced BWR Double A) with 'stable' outlook to PTC India Financial Services Limited (PFS) for proposed Non-Convertible bonds issue of INR 100 crore or 1 billion. The Brickwork Rating BWR AA signifies 'High Credit Quality' and the Rating Outlook further signifies the direction of the rating being stable in the near term. Brickwork has relied upon the audited financial statements, information and clarifications provided by the issuer.

The rating factored positive factors including significant ownership of the promoter (PTC), comfortable capital adequacy and leverage, international perspective in infrastructure funding projects (Involvement of Goldman Sachs and Macquarie), and lean operating structure. The rating also reflected that PFS has shown a relatively conservative financial profile. These positive factors are reinforced by the favorable growth in demand for electricity, which is expected to grow ahead of capacity additions in the country. Besides, the Indian government's active interest in the energy sector's capacity additions and investment programs, being seen as critical factor for further Sectoral growth.

The rating is, inter alia, influenced by exposure to a single sector, the tendency of energy projects to have time and cost overrun, competition from well established and stronger players, difficulty in continuous availability of raw materials for biomass power projects, coal price fluctuation and limited standalone track record of the Company. In addition, the Company may face liquidity risk, given its c0nstraints in implementing cost overrun and further necessary investments. In order to address the issues, PFS has put in place a well defined operating strategy.

The Company has considerable funding availability, which includes Rs 500 crore line of credit facilities from a group of five banks. In the event of uncertainties, the Company has access to additional liquidity and financial support from the PTC. Brickwork does not expect a mismatch in the Company's asset-liability position in the medium term. As a matter of prudence, the Company has a policy to keep enough liquid investments in order to manage the fixed obligations.

The rating concerns are centered on the Company's single sector exposure, and its vulnerability to the power sector volatilities such as long gestation period, project cost overrun, fuel price fluctuation, availability of raw materials, and quite often not so helpful regulation. The Company has taken concerted efforts to mitigate the aforesaid deficiencies. The Company has preferred to provide financial assistance to small and medium power projects, which are expected to start power generation in two to three years. Projects are regularly monitored both physically and financially. The PTC group intends to buy a coal mine abroad in near future in order to mitigate the fuel price fluctuation, which is likely to benefit power projects financed by PFS.

The Company provides finance to power sector projects in India to meet the project requirements in the initial or at developmental stage. The Company has performed well during the financial year 2009 in spite of many challenges witnessed in the macro environment front in the country. During the year, the Company has used mix of debt and equity to sanction financial assistance of Rs 722 crore to 15 projects. As on 31st March 2009, the Company provided incremental financial assistance of Rs 886 crore to 19 projects. The Company's PBT and PAT have increased to Rs. 8.68 crore and Rs. 8.53 crore respectively in FY09. Revenue has increased to Rs 11.6 crore in FY 09 from Rs 3.16 crore in FY 08. It is observed that major part of the revenue had come from income from treasury investments. Going forward, the PFS is expected generate more revenue from core operations.

The Company has the support and backing of PTC and is developing its skills to execute its envisaged goals. Brickwork feels that the Company has the ability to achieve sustainable cash flow generations and margins in accordance with its business plans, as such, it has assigned STABLE outlook for the Company's proposed debt issue.

Copyright ©, 2009, Brickwork Ratings.

Brickwork Ratings has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. Brickwork has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. Brickwork does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by Brickwork should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. Brickwork has the right to change, suspend or withdraw the ratings at any time for any reasons.


CONTACT DETAILS
Dr. A Suresh Kumar, Lead Analyst Contact, Brickwork Ratings, 1-860-425-2742, suresh.kumar@brickworkratings.com
V Raghunandana, Co-Analyst Contact, Brickwork Ratings, 1-860-425-2742, raghunandana.v@brickworkratings.com
Anitha G, Media Contact, Brickwork Ratings, 1-860-425-2742, media@brickworkratings.com
Rajender Walia, Director - Business Development, Relationship Contact, Brickwork Ratings, 1-860-425-2742, rajender.walia@brickworkratings.com

KEYWORDS
CONSUMER, ECONOMY, MARKETING, BANKING, BUSINESS SERVICES, Financial Analyst, STOCK EXCHANGES

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