Rating Rationale
September 28, 2016 | Mumbai
Rainbow Papers Limited
Rating revised to 'Not Meaningful'
 
Total Bank Loan Facilities Rated Rs.7910 Million (Reduced from Rs.10410 Million)
Long Term Rating NM (Revised from 'CRISIL D')
Long Term Rating Withdrawal
Short Term Rating Withdrawal
(Refer to Annexure 1 for Facility-wise details)

CRISIL has withdrawn its ratings on the Rs 2500-million bank loan facilities of Rainbow Papers Ltd (RPL; part of the RPL group) on completion of the notice period, and has revised its rating on the company's Rs 7910-million bank facilities to (NM) Not Meaningful from 'CRISIL D'.

The revision to 'NM' category is because the company has been referred to Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act 1985 on account of erosion of networth. As per CRISIL criteria, if a rated entity is referred to BIFR or declared sick, the outstanding ratings are rendered meaningless.

CRISIL had placed the ratings on the Rs 2500-million bank facilities on 'Notice of Withdrawal' at the company's request. The rating action is in line with CRISIL's policy on withdrawal of its ratings on bank loan facilities.

About the Group

RPL was established by Mr. Radheshyam Goenka as a private limited company in 1986, and was reconstituted as a public limited company in 1991. RPL manufactures newsprint, writing and printing paper, duplex boards, poster paper, and other paper products such as crepe paper and coated paper. It has completed installation of a folding duplex board plant, resulting in enhancement in production capacity to 466,700 tonne per annum in fiscal 2015. RPJ trades in paper and waste paper.

The group is managed by the second generation of the Goenka family, headed by Mr Ajay Goenka.

The RPL group reported operating loss of Rs 3.0 billion on sales of Rs 4.36 billion for fiscal 2016, against an operating profit of Rs 1.46 billion on sales of Rs 11.33 billion for fiscal 2015.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Bank Guarantee 71 Withdrawal Bank Guarantee 71 CRISIL D(Notice of Withdrawal)
Cash Credit 1300 Withdrawal Cash Credit 1300 CRISIL D(Notice of Withdrawal)
Letter of Credit 1129 Withdrawal Letter of Credit 1129 CRISIL D(Notice of Withdrawal)
Proposed Long Term Bank Loan Facility 2276 NM Proposed Long Term Bank Loan Facility 2276 CRISIL D
Proposed Term Loan 1000 NM Proposed Term Loan 1000 CRISIL D
Term Loan 4634 NM Term Loan 4634 CRISIL D
Total 10410 -- Total 10410 --

Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating Criteria for Manufacturing Companies
Rating Criteria for Paper Industry
CRISILs Criteria for Consolidation
Criteria for rating Short-Term Debt (including Commercial Paper)

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