Fitch cuts Bajaj Eco-Tech’s NLR to ‘BB’ from ‘BBB-’; outlook negative
December 15, 2009
Fitch Ratings has said that it has cut Bajaj Eco-Tech Products Ltd’s (BEPL) national long term (NLR) rating to ‘BB' from 'BBB-', due to deterioration in the company’s credit profile following delays at BEPL’s manufacturing facilities.
The ratings agency also revised BEPL’s outlook to ‘negative’ from ‘stable’ on Fitch's expectations that the company's credit profile and liquidity would remain under pressure in the short- to-medium-term, due to lower revenue and profitability.
Fitch said that the downgrade reflects the significant deterioration in BEPL's credit profile on the back of delays in the stabilisation of its particle board and medium-density fibreboard manufacturing facility which resulted in cash losses and had a severe impact on FY09 liquidity.
While liquidity continues to remain stretched, Fitch said that the company has shown some improvement in its profitability over the past six months, with liquidity being aided by continuous equity infusion from BEPL’s parent, Bajaj Hindusthan Ltd, and the downgraded ratings continue to factor in parental support.