Global rating agency Standard & Poor's (S&P) today revised upwards the rating outlook of printing paper maker Ballarpur Industries to stable on expectation that the company's operating performance will continue to improve.
S&P revised the outlook to stable from negative. Stable means that a rating is not likely to change while negative denotes that the rating may be lowered.
"The outlook revision reflects our expectation that Ballarpur's operating performance will continue to improve because of the company's cost efficiency measures and the stabilisation of its pulp operations at Sabah Forest Industries," the rating agency said in a release.
At the same time, it has retained its BB- long-term corporate credit rating on Ballarpur Industries. BB indicates the least degree of speculation.
"We expect Ballarpur to complete its paper capacity expansion in 2010, which, in our view, will improve the company's economies of scale and strengthen its cash flows over the medium term," S&P said.
It further said that the domestic demand for paper products continues to be strong, and the company's pulp operations have stabilised after a weak performance.
"We expect the company's capacity utilization to be high (at about 85 per cent) in the next few quarters, and its proportion of domestic sales, which have higher margins than exports, to remain above 90 per cent," it said.
