Kirloskar Brothers gets FA plus

The FA plus rating assigned to the fixed deposit programme of Kirloskar Brothers (KBL) has been reaffirmed. The Rs. 20 crore commercial paper programme has been assigned P1.

The rating continues to reflect the company's dominant position in the domestic pumps market, strong brand equity, a wide distribution network, and its proven capabilities in the turnkey project execution segment. The rating also factors in the improving financial risk profile of the company as reflected by steady margins, accruals and interest coverage ratios over the last two years. The rating is, however, constrained by the high degree of competition in the agricultural and domestic pump segment, the company's working capital intensive nature of operations, its large exposure to group companies and its moderate capital structure.

KBL is engaged in the manufacture and sale of industrial, agricultural and domestic pumps to the domestic and overseas markets. The company also undertakes turnkey project execution for various irrigation projects and other large industrial applications. In addition, the company undertakes the manufacture and sale of valves and anti-corrosion products in a small way. The company reported a net profit of Rs. 12.48 crores on a net sales of Rs. 370.36 crores during 1999-2000. The reduction in net profit from Rs. 16.14 crores to the current level is primarily due to the settlement of an excise duty violation between 1981 and 1985 alleged by the Excise Department.

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Section  : Business
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