Fitch views cabinet approval of HOCL's revival package as positive

New Delhi, Mar 17 (UNI) Fitch Ratings today said the Indian cabinet's recent approval for a revival package for Hindustan Organic Chemicals Ltd (HOCL) was a positive development.

On 1 September, 2005, Fitch had assigned an expected National Short-term rating of F1+(Ind)(SO)' to the Rs 100-crore Non-Convertible Debenture programme.

The rating is based solely on the unconditional and irrevocable guarantee extended by the Government of India (GoI).

HOCL is a Board of Industrial and Financial Reconstruction (BIFR) registered company. The financial restructuring package has been cleared by the Cabinet Committee on Economic Affairs (CCEA) based on the recommendations of the Board for Reconstruction of Public Sector Enterprises.

The package consist of grants aggregating Rs 75 crore and subscription by way of non-cumulative redeemable preference shares by the GoI.

Fitch notes that though the proposal technically still needs an approval from the BIFR, the agency expects the approval to be given soon. HOCL expects to incur net losses this fiscal year ending 31 March, 2006. Fitch also notes that HOCL plans to initiate operational restructuring at its two units as part of the revival package in a bid to make the company viable as a standalone entity.

UNI RA SD KN1731