For Quick Alerts
For Daily Alerts

Crisil downgrades BHEL's long term bank loans to 'Negative'

By Religare

CRISIL, a leading rating firm, has revised its rating outlook on the long-term bank facilities of Bharat Heavy Electricals Ltd (BHEL) to 'Negative' from 'Stable', citing that company's project execution and profitability will remain vulnerable to ongoing structural issues in the power sector.

The agency has reaffirmed the long-term rating at 'CRISIL AAA', while revised the rating on the company's short-term facilities to 'CRISIL A1+'.

The outlook revision reflects CRISIL's belief that BHEL's working capital cycle will remain stretched. Initiatives by the government to speed up clearances for stranded power projects, including auction of coal blocks, may take longer than expected to materially strengthen BHEL's business profile. Receivables continue to be sizeable with around a fifth of the outstanding receivables from projects undertaken by private sector developers some of which continue to face delays in implementation and/or shortfalls in project funding.


For the quarter ended June 30, 2015, BHEL reported an operating loss (before depreciation and amortisation) of Rs.2 billion, primarily due to a 15 per cent decline in sales over the corresponding quarter of 2014-15 (refers to financial year April 1 to March 31), to Rs.4.3 billion. Moreover, the costs remain high.

CRISIL's ratings on the bank facilities of BHEL continue to reflect BHEL's leading position in the power and industrial electrical equipment markets in India, healthy order book, and strong financial risk profile. These rating strengths are partially offset by high receivables, declining sales, and exposure to intense competition and structural issues in execution of power sector orders.

Story first published: Tuesday, September 22, 2015, 23:00 [IST]
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'


We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more