Credit Rating Information Services of India Ltd, the rating agency, has downgraded the non-convertible debentures of Ballarpur Industries Ltd (Bilt) to BBB from A+. Crisil has also scaled down the rating of Bilt''s fixed deposit programme from FA+ to FA-.

The reason: the deteriorating financial risk profile of the company. Crisil has taken into account the fact that margins in the paper industry, which is Ballarpur Industries'' main business, have been under severe pressure. Also, the rating agency has considered the limited financial flexibility of the company owing to its high leveraging, and the debt repayment obligations along with the company''s large ongoing capital expenditure programme. The company also has a high level of foreign currency borrowings.

The Ballarpur Industries management has issued a press release saying that "Crisil should have taken into account the successful implementation of the restructuring of the company which has strengthened the capital structure, improved operating profitability and cash flow generation ..."