December 20, 2012

Mumbai

Speciality Papers Limited

Ratings Suspended

Total Bank Loan Facilities Rated
Rs.223.8 Million
Long-Term Rating
Suspended
Short-Term Rating
Suspended

(Refer to Annexure 1 for details on facilities)

CRISIL has suspended its ratings on the bank facilities of Speciality Papers Ltd. (Speciality Papers). The suspension of ratings is on account of non-cooperation by Speciality Papers with CRISIL's efforts to undertake a review of the ratings outstanding. Despite repeated requests by CRISIL, Speciality Papers is yet to provide adequate information to enable CRISIL to assess Speciality Papers’s ability to service its debt. The suspension reflects CRISIL's inability to maintain a valid rating in the absence of adequate information. CRISIL considers information availability risk as a key credit factor in its rating process and non-sharing of information as a first signal of possible credit distress, as outlined in its criteria ‘Information Availability Risk in Credit Ratings’.

About the Group

CRISIL has combined the business and financial risk profiles of Reliable Paper, Prime Industries Ltd (Prime Industries), Opel Paper Mills Ltd (Opel Paper) and Speciality Papers Ltd (Speciality Papers) - collectively referred to as the Reliable group – because Reliable Paper, Prime Industries and Opel Paper are expected to be merged with Speciality Papers over the medium term. The key reason for the merger is the consolidation of the group’s operations in order to bring about operational and financial synergies.

Reliable Paper, set up in 1974 by Mr. Mekan J Gala, mainly trades in paper and paper products. The company is an authorised distributor of Ballarpur Industries Ltd. Reliable Paper’s plant in Bardoli (Gujarat), has a manufacturing capacity of 6,000 tonnes of tissue-grade paper per annum. Reliable Paper is undertaking a large debt-funded capital expenditure programme of Rs.800 million for setting up a paper mill which will increase its manufacturing capacity to 45,000 tonnes per annum (tpa) from the existing capacity. The project was expected to commence operations by June 2009; however there were some delays and the new capacity would be operational from July 2010.

Speciality Papers was a sick unit and was acquired by the promoters in 1998. The promoters were able to turn around the company by revamping its product mix and focusing on exports. The company’s plant in Vapi (Gujarat) has capacity of manufacturing 9,350 tpa of machine-glazed specialty paper.

Opel Paper Mill manufactures coated paper and its plant in Vapi has a capacity of 3,000 tpa. Prime Industries is engaged in the conversion and packaging of jumbo rolls. Its products are sold under the Lincoln brand.

Annexure 1 - Details of various bank facilities

Current facilities
Previous facilities
Facility
Amount
(Rs.
Million)
Rating
Facility
Amount
(Rs. Million)
Rating
Cash Credit
77.5
Suspended
Cash Credit
77.5
CRISIL D
Letter of Credit
20
Suspended
Letter of Credit
20
CRISIL D
Proposed Long-Term Bank Loan Facility
96.3
Suspended
Proposed Long-Term Bank Loan Facility
96.3
CRISIL D
Rupee Term Loan
30
Suspended
Term Loan
30
CRISIL D
Total
223.8
--
Total
223.8
--

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December 20, 2012

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