Mumbai:
CARE
has assigned a 'PR1 [PR One]' rating to the Goetze India's
(GIL) proposed short term debt programme (restricted to
commercial paper, short term debentures and bank borrowings)
aggregating Rs90crore (enhanced from Rs85crore). The company
has also retained the 'A+' [single A plus] rating assigned
its Rs10-crore non-convertible debentures (NCDs), redeemable
in eight equal quarterly instalments, with a moratorium
of one year from the date of allotment.
These ratings factor in GIL's dominant position in the
pistons and piston rings industry, growth in operations,
access to technology through tie-ups and sustained relationships
with a large number of automobile companies as preferred
original equipment (OEM) supplier. The rating is, however,
constrained by high gearing, tight liquidity position,
limited ability to pass on increases in the cost of raw
materials to its customers and cyclicality in the automobile
sector.
Incorporated
in 1954, GIL was set up in technical and financial collaboration
with Goetze AG, Germany. Goetze AG is now a part of Federal
Mogul Inc (USA), a leading global player in automotive
components. Pistons and piston rings are GIL's main products,
and it is the market leader in most segments in this field,
with an aggregate market share of around 40 per cent in
FY'04.
Total
income from operations during FY'04 grew to Rs407crore,
a growth of 32 per cent on an annualised basis over FY'03,
on account of favourable market conditions and growth
in the automobile sector. PBILDT margin declined to 19.5
per cent in FY'04 from 22.2 per cent in FY'03, mainly
on account of an increase in the prices of raw materials
like aluminum, nickel, etc, which
cannot be fully passed on to its customers. Overall gearing
of the company decreased to 2.7 times (as on 31 March
2004) from 3.4 times (as on 31 March 2003).
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