ICRA has downgraded the long-term ratings assigned to the Rs. 30.0 crore fund-based limit and Rs. 100.0 crore non-fund based limit of Roman Tarmat Limited (RTL) from LBB+ (pronounced L double B Plus) to LB+ (pronounced L B Plus). ICRA has also downgraded short-term rating assigned to the Rs. 5.0 crore of non-fund based limit from A4+ (pronounced A four Plus) to A4 (pronounced A four) of RTL.

The ratings revision takes into account certain delays by the company in meeting obligations towards non-fund based facilities availed in the past and more than 50% decline in the Operating Income (OI) to Rs. 46.4 crore in the first nine months of FY11 ending 31st December 2010 (9MFY11) from Rs. 93.6 crore in the corresponding 9 months of FY10. The company‘s PAT (Profit after tax) declined by 91.5% to 0.24 crore from 2.85 crore in the same period on account of lower turnover and higher interest cost. Further, the revision in the ratings takes into account the sharp rise in working capital intensity (NWC/OI) to 166.4% in the first 6 months of FY11 ending 30th September 2010 (6MFY11) from 85.06% in FY11 due to increase in debtor days and inventory days resulting in stretched liquidity of the company. Nevertheless, the ratings continue to draw comfort from RTL‘s established track record in the domestic construction industry; experienced management team; improvement in the operating margins in 6MFY11 and relatively low gearing of 0.37 times as of 30th September 2010. The rating revision is on the basis of best available information in the public domain.