CRISIL Rated C/P4 To Lakshmi Mills

CRISIL has assigned its ratings of C/P4 to the various bank facilities of Lakshmi Mills Company (Lakshmi Mills). The rating is constrained by the liquidity crisis that the company faces, resulting in a delay in meeting the interest and principal obligations on its loans.

1. Rs 78 million Cash Credit C (Assigned)
   
2. Rs 148 million Working Capital Demand Loan C (Assigned)
   
3. Rs 699.50 million Long Term Loan C (Assigned)
   
4. Rs 14 million Packing Credit P4 (Assigned)
   
5. Rs 20 million Bills Purchase-Discounting Facility P4 (Assigned)
   
6. Rs 246.50 million Letter of Credit P4 (Assigned)
   
7. Rs 56 million Bank Guarantee P4 (Assigned)
   
8. Rs 100 million Export Forward Cover P4 (Assigned)

*Rs 20 million interchangeable with Letter of Credit limit

The rating also takes into account Lakshmi Mill`s (Q, N,C,F)* weak financial profile and exposure to volatile raw material prices. CRISIL believes that the liquidity pressure on the company will remain over the medium term in view of the current situation in the textile industry, coupled with the company`s weak financial profile.

Lakshmi Mills, based in Coimbatore, Tamil Nadu, was formed in 1910. The company has manufacturing units at Palladam, Kovilpatti, and Coimbatore. Lakshmi Mills is primarily a spinning company, with a capacity of 0.14 million spindles, and produces cotton and polyester blended yarn. A small portion of Lakshmi Mills revenues is also from grey fabrics (the company has 114 looms) and made-ups; the company sells made-ups under its own brand, Tyche and has outlets in Chennai, Coimbatore and Kovilpatti.

The company plans to phase out its loom capacity by March 2009 and confine itself to spinning. For 2007-08 (refers to financial year, April 1 to March 31), Lakshmi Mills reported a loss of Rs 49.80 million on net sales of Rs 1.01 billion, as against a profit after tax of Rs 55.78 million on net sales of Rs 1.41 billion for 2006-07. Shares of the company gained Rs 19, or 2.88%, to settle at Rs 679. The total volume of shares traded was 5 at the BSE

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