The troubled times faced by the denim industry seems to be taking a toll on the denim players. Sanjay Lalbhai-owned Arvind Ltd has got approvals from banks for restructuring its loan payments, highlighting the difficult times faced by big corporations.
Credit rating agency Crisil believes that Arvind may not be able to meet some of the debt obligations, which would be under consideration for rescheduling, due this month.
“Arvind had sought lenders’ approval for rescheduling of loans for January 2009 in the last week of December 2008 itself. Crisil has erred in downgrading even after our lead bank intimated the agency about the approval,” said Milan Shah, deputy chief financial officer of Arvind.
Brushing aside Crisil’s rating as immature and deliberate, Arvind officials said that its lead bank, State Bank of India (SBI), had intimated the rating agency about lenders’ approval on rescheduling of loan repayments. The denim major said that it has received approval from the Bank of Baroda, UCO Bank and ICICI Bank for rescheduling term loan payment worth Rs 15 crore each for January and February 2009.
Crisil has downgraded Arvind Ltd and its subsidiary Arvind Products by three notches to ‘default’ category on concern that internal accruals are unlikely to suffice because of the weak business environment. The 'default' comes even as banks led by State Bank of India, Bank of Baroda and others are restructuring the loans of the textile major.
Crisil has downgraded the ratings on the bank loan facilities of Arvind to ‘D/P5’, from ‘BBB-/Negative/P3’. While instruments rated ‘D’ are in default or are expected to default on scheduled payment dates, P5 rating indicates that the instrument is expected to be in default on maturity or is in default.
Crisil Senior Director Raman Oberoi said, “Both Arvind and Arvind Products have paid their dues till December and are in the process of re-scheduling their loans.
The textile industry is under pressure and we have downgraded Arvind due to ‘timelessness’ of the payments.”
In associate with Maulik Pathak & Abhijit Lele
