Rating agency CARE has downgraded bank facilities and non-convertible debentures (NCDs) of city-based Hindusthan National Glass & Industries Ltd. (HNGIL)
While the rating of long-term bank facilities, worth about ₹2,663 crore, had been revised to ‘D’, indicating the possibility of default, from stable ‘B plus’, that of NCD Series III was revised to negative outlook from stable, HNGIL said.
Promoted by C.K. Somany, a technocrat with 60 years experience in glass technology, the company is among the leading manufacturers of container glass. It has units in West Bengal, Haryana, Puducherry, Uttaranchal, Rajasthan, Maharashtra and Andhra Pradesh.
The banks which had extended long term facilities to the company included the State Bank of India , the Export Import Bank of India, Edelweiss Asset Construction Company , HDFC Bank Ltd , Axis Bank Ltd and Syndicate Bank. All the loans have now become outstanding CARE Ratings Ltd noted.
Banks extending fund-based limits include Bank of Baroda, Standard Chartered Bank and DBS Bank. The rating agency said that the revision in the ratings assigned to bank facilities and instruments of HNG&I L took into account the ongoing delays in servicing of the bank facilities by the company .
The firm’s liquidity position was impacted due to high-level of operational loss through fiscal 2017 and cash loss in the first half of fiscal 2018 on subdued demand, leading to sub-optimal capacity utilisation.
The negative outlook reflected anticipated continuation of stress on liquidity, till improvement of the industry demand scenario on the one hand and funds infusion by the promoters on the other. The company suffered a 7 % decline in its operating income (₹1,853.5 crore) in fiscal 2017 compared to a year ago . During last fiscal, while its operating loss increased, its net loss declined following ₹94.5 crore extraordinary income on account of a divestment of its shareholding in a subsidiary. Losses continued in the first half of fiscal 2018 too.