Seshasayee Paper and Boards Limited has informed the Exchange about Credit Rating
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CRISIL Ratings has revised the credit rating on Seshasayee Paper and Boards' long-term bank facility of Rs. 241 crore from 'AA-' to 'CRISIL A+ (Stable)', marking a one-notch downgrade. The short-term facility of Rs. 51 crore was reaffirmed at 'CRISIL A1'. The company has publicly disagreed with the downgrade and refused to accept the new rating. Management cited three reasons for disagreement: the long-term facilities are only one-year working capital limits with no term loan outstanding; the company's cash and bank reserves exceed the rated bank limits; and the business continues to post profits with a strong balance sheet.
Despite the disagreement, the downgrade from AA- to A+ on the long-term facility is negative for sentiment, as AA- category borrowers typically enjoy lower borrowing costs than A+ rated peers. However, the strong cash position and absence of term debt limit the practical impact, and the reaffirmation of the short-term rating at A1 keeps commercial operations unaffected.