TEXT: ESVEEGEE Breweries Rated at 'Fitch D(ind)'
source:Reuters
The ratings reflect ESVEEGEE's defaults on principal repayment, amounting to INR0.6m outstanding as on 4 January 2012. The company has delayed the servicing of its term loan interest and principal by more than three days for the last six months. ESVEEGEE could not generate sufficient cash flow from operations as its facility began alcohol production only from July 2011. Capacity utilisation was also low at 37%. However, the increasing demand from bottling units in the North East is likely to generate sufficient sales volumes in the near-term.
Timely repayments of its term liabilities and interest obligations for two consecutive quarters would lead to a rating review.
ESVEEGEE is a Sikkim-based sole producer of extra neutral alcohol (spirit). The company has an installed capacity of 60 kilo litres per day. The promoters have 15 years of experience in the liquor business and have other liquor businesses in Assam and Sikkim.
Fitch has also assigned ratings to ESVEEGEE's bank loans as follows:
- INR207.3m term loan: assigned 'Fitch D(ind)'
- INR55m fund-based working capital limits: assigned 'Fitch D(ind)'
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