Mumbai: Mercator Lines Ltd (MLL), engaged in the coastal and international cargo movement, has been rated CARE AA- by Credit Analysis and Research Ltd (CARE) for its debt programme for the financial year 2002 (FY 2002).
Indicating a 'high investment grade,' this is an upgradation from the earlier rating of A+ for FY 2001. The rationale for the rating as indicated in the CARE report states: ''The rating factors in MLL's niche market position and stable operations of its liquid lighterage business at Mumbai Port, the high profitability of its shipping division due to its strategy of acquiring second-hand ships at low-capital costs, and a conservative financial profile evidenced by low gearing, good investment cover and low-debt payback period.''
MLL has two divisions: lighterage and shipping. The lighterage division operates primarily in the Mumbai Port and has a dominant market share of about 65 per cent. It handles bulk liquids like petroleum products, edible oils and specialty chemicals. It has five self-propelled barges and three mini-tankers, which are used for these operations.
The shipping division is engaged in the coastal and international movement of petroleum products and other liquid cargo. It has a total of eight tankers with a capacity of over 115,000 dwt.
The company has shown a steady growth in its return on capital employed over the last few years and its interest cover has been in excess of three times for the last four years. For the year ending March 2002, the interest cover was as high as six times. The high profitability has also ensured a low-debt payback period.
During 2001-02, the company acquired three medium-sized tanker vessels with a combined capacity of approximately 22,500 MT to cater to its growing international operations. The full impact of the acquisitions will be felt in the current year (2002-03).
During the year ended March 2002, MLL clocked an income of Rs 54.98 crore - up from Rs 31.77 crore during the previous year (2000-01), registering a substantial growth of 73 per cent.
The company recorded a gross profit of Rs 13.13 crore (previous year: Rs 6.95 crore) and a net profit of Rs 7.54 crore (Rs 3.28 crore). The company has recommended a higher dividend of 20 per cent as against 16 per cent last year.
The company has an uninterrupted dividend record ever since it went public in 1993.