MUMBAI, AUGUST 30: The Credit Rating Information Services India Ltd (Crisil) today downgraded non-convertible debenture issues of the Arvind Mills Ltd (AML) from moderate risk to `substantial risk' category.The revision in rating is reflective of the vitiation in AML's capital structure and resultant liquidity pressure which have led to the company delaying on its debt obligations to institutions and banks, Crisil said in a statement here.The rating assigned to two NCDs for total value of Rs 72.72 crore and Rs 25.36 crore have been downgraded from "BBB+" to "C" due to substantial cost and time overruns in expansion and diversification projects as well, it said.This along with stabilisation problems coinciding with ongoing downturn in denim industry led to reduction in internal accruals, it said adding slow progress in liquidation of investments in group companies has resulted in the overruns, predominantly debt funded.The company's financial position in 1999-00 is expected to worsen becausecapitalisation of projects would lead to an increase in fixed costs which would more than offset the advantage of lower power costs and higher capacity utilisation, cautions the rating agency.AML's expansion and diversification projects have suffered from substantial time and cost overruns as well as stabilisation problems which have coincided with the ongoing downturn in the denim industry. The consequent reduction in internal accruals and slow progress in liquidation of investments in group companies has resulted in the overruns being predominantly debt funded.
