Oswal Pumps Ltd. announced that ICRA Limited has reaffirmed its credit ratings but revised the outlook for the company’s long-term fund-based cash credit facilities to Negative from Stable. This revision stems from a substantial build-up of receivables and a moderation in profitability due to increased competitive intensity and input prices, leading to higher working capital intensity.
Credit Rating Update from ICRA
Oswal Pumps Ltd. has received a notification from ICRA Limited regarding its credit ratings. ICRA has reaffirmed the credit ratings for the company’s instruments. However, the outlook for the Long term – Fund based – Cash credit facilities has been revised from Stable to Negative.
Reasons for Outlook Revision
The revision in outlook is attributed to a significant build-up of receivables, coupled with a moderation in profitability. This situation is further compounded by increased competitive intensity and rising input prices. Consequently, the company has experienced an elongation in its collection cycle and a subsequent rise in working capital intensity. ICRA highlighted that timely receipts, particularly from government subsidy schemes, remain crucial for reducing outstanding receivables and improving the working capital cycle.
Subsidiary Rating Update
Additionally, ICRA has reaffirmed the credit ratings for Oswal Solar Energy Private Limited, a material subsidiary. The outlook for its Long term – Fund based – Cash credit and Long term – Fund based – Term loan has also been revised to Negative from Stable. The outlook for Long term/Short term Unallocated limits has been revised to Negative, with ratings of ICRA A+ (Negative) / ICRA A1 reaffirmed.
Source: BSE
