Fitch downgrades PEC

Fitch Ratings said it downgraded PEC Ltd.'s national long-term rating to A-(ind) from A(ind), its Rs. 39.92 billion of fund-based limits to A-(ind)/F2+(ind) from A(ind)/F1(ind) and its Rs. 59.72 billion of non-fund-based limits to F2+(ind) from F1(ind).

The outlook remains stable.

The agency said the downgrades reflect the increased receivables risk as evident from the company's increasing and ageing receivables. Total receivables were Rs. 17.9 billion and Rs. 33.9 billion at the end of 2008 and 2009, respectively, equivalent to 115 and 120 days of revenues, respectively, and close to 38% of PEC's debtors were more than six months old at the end of 2009, according to Fitch.

However, the agency noted that the company has maintained a favorable financial profile given substantial cash reserves, negative net debt and adequate interest coverage, and the ratings continue to derive support from limited price and exchange risk as more than 90% of the company's trades are back-to-back transactions.

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