CRISIL has assigned its bank loan ratings of 'A/Stable/P1' to the various bank facilities of Eagle Fuel Pvt Ltd (EFPL), which is part of the Agarwal group of companies. The ratings reflect the Agarwal group’s comfortable financial risk profile, supported by significantly improved profitability, and established position in the imported thermal coal business, aided by healthy growth prospects. These strengths are, however, partially offset by the group’s increasing exposure to risks relating to volatility in the shipping business, fluctuations in foreign exchange rates, increasing international coal prices, competition in the imported thermal coal trade, and supplier concentration.

For arriving at the ratings, CRISIL has combined the business and the financial profiles of EFPL and its associate companies, Agarwal Coal Corporation Pvt Ltd (ACCPL), Agarwal Coal Corporation (S) Pte Ltd (ACCSPL) and Agarwal Transport Corporation Pvt Ltd (ATCPL). This is because of the strong business linkages among the companies and common ownership.

Outlook: Stable
CRISIL believes that the Agarwal group will be able maintain its comfortable financial risk profile on the back of healthy profitability and established market position in the imported coal trading business. The outlook may be revised to ‘Positive’ if the group consolidates its business size and extends into value-added services, while maintaining a comfortable financial risk profile. Conversely, the outlook may be revised to ‘Negative’ in case of large debt-funded capital investment or significant pressures on profitability.

About the group
EFPL was incorporated in 1981 and did not have any business until 2004-05 (refers to financial year, April 1 to March 31). Its name was changed from Eagle Construction Pvt. Ltd to its present name in 2006-07. The company is mainly engaged in domestic thermal coal trading, while ACCPL, the flagship company of the group, is engaged mainly in imported thermal coal trading. ACCSPL is also engaged in the imported coal trading business, with ACCPL and EFPL together holding a 74 per cent stake in the company. Its other group company ATCPL provides stevedoring and inland transportation services exclusively to customers of the group companies.

For 2007-08, the group reported a profit after tax (PAT) of Rs. 742 million on net sales of Rs. 12.77 billion, as against a PAT of Rs. 88 million on net sales of Rs. 6.48 billion in the previous year.