Investment consulting firm Crisil has downgraded its rating for Rs 220 crore worth of bank loan facilities for GP Petroleums Ltd, which is a part of the Gulf Petrochem Group.
The long-term rating of A-minus with negative outlook has been revised to BBB-plus with a stable outlook. The short-term rating of A2-plus has been downgraded to A2.
The rating action reflects a moderation in the parent group's financial risk profile on account of continued high leverage and weak operating cash flows, said Crisil.
Gulf Petrochem Group's leverage marked by debt/EBITDA (earnings before interest, tax, depreciation and amortisation) continues to be higher than the earlier expectation, it added.
At the same time, the ratings reflect GP Petroleums' established market position in the industrial lubricant segment and healthy financial risk profile because of sound capital structure and debt protection metrics.
These strengths are partially offset by modest scale of operations in the intensely competitive lubricants industry, exposure to volatility in raw material prices and working capital-intensive operations, said Crisil.
GP Petroleums is a leading lubricant player specialising in industrial and automotive lubricants, process oils, transformer oils, greases and other specialities under the brand name IPOL in India and overseas market.
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