CIL gets highest Crisil corporate credit rating

New Delhi, July 7: State-owned Coal India Ltd(CIL), expecting Navaratna status by the Department of Public Enterprises, has been assigned the highest corporate credit rating CCR AAA by a leading rating agency.

The rating of CIL, which along with its subsidiaries accounts for 86 per cent of the coal production in India, reflects Coal India's strong financial risk profile, near-monopoly position and favourable business prospects, given India's growing energy requirements, credit rating agency Crisil said.

Financial profile of Coal India, which is expected to hit the market with its initial public offer (IPO) soon after it gets Navaratna status, is marked by healthy cash accruals, a low gearing, and strong debt protection measures, Crisil, an affiliate of the world's leading rating agency Standard and Poor's, said. As on March 31, 2006, the company had a gearing of 0.2 times, and net cash accruals to debt ratio of 2.5 times.

Gearing is a measure of financial leverage, demonstrating the degree to which a company's activities are funded by owner's funds versus creditor's funds. The higher a company's degree of leverage, the riskier it is considered.

Crisil said Coal India's rating strengths are, however, partially offset by '' its tax-inefficient corporate structure and dominant influence of socio-political factors limiting its flexibility to redeploy manpower and increase product prices.'' Coal India and its subsidiaries have about 200 mining blocks, with an estimated coal reserve of 73 billion tonnes, of which more than 85 per cent is in Jharkhand, Orissa, Chhattisgarh, and West Bengal, Crisil added.

UNI