Fitch gives Escorts loans BB(ind)

Fitch Ratings said it assigned Escorts Ltd. a national long-term rating of BB(ind), along with a BB(ind) rating to its term loans of Rs.1.64 billion, BB(ind)/F4(ind) ratings to its fund-based working capital limits amounting to Rs.2.05 billion and BB(ind)/F4(ind) ratings to its non-fund based working capital limits amounting to Rs.1.09 billion.

The outlook is stable.

The ratings factor in Escorts' long history in tractor manufacturing, extensive product portfolio and efforts to focus on its core business of agri-farm and construction equipment, Fitch said.

The ratings are constrained by the company's weak financial profile with significant accumulated losses, low profitability margins due to high cost of production, limited penetration on a pan-India basis resulting in lower capacity utilization in the tractor business, the agency said, and the poor performance of its subsidiaries.

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