ICRA upgrades rating of Coal India's Rs 400 cr bond prog

New Delhi, Mar 30 (UNI) Credit rating agency ICRA has upgraded the rating assigned to the Rs 400 crore Secured Bond Programme of Coal India Limited (CIL) from LAA+ to LAAA, indicating highest credit quality.

The rated instrument carries the lowest credit risk. To evaluate Coal India's business and financial risk profile for assigning a rating, ICRA continues to consolidate the financial health of the holding company with that of its eight subsidiaries as a single entity (CIL).

The rating upgrade reflects the sustained improvement in CIL's financial risk profile following a turn around of two of its loss making subsidiaries and a possible fastening of pace of new project approvals which has typically witnessed prolonged delays in the past.

In assigning its ratings in the past, ICRA had viewed both these factors as key rating sensitivities. The rating also continues to factor in the highly favourable demand-supply situation in the domestic non-coking coal industry, CIL's near monopoly position in the strategically important sector, access to vast coal reserves, existing linkages with key clients, improvement in cost structure with increased focus on open cast mining resulting in healthy profitability, a conservative capital structure and strong debt servicing indicators.

The rating, however, also considers CIL's inferior grades of coal deposits with lower calorific values and high ash content, which could expose it to competition from alternative fuels in the long term, higher participation of both key coal users and private players in the mining process, significant exposure to financially weak SEBs and a large, though declining, workforce.

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