An ICRA Financial Strength Grading is a symbolic indicator of ICRA's current opinion on the relative financial profile of the shipbuilding company concerned. An ICRA Financial Strength Grading is not a comment on any specific debt servicing capability of the shipbuilder.
The focus of Financial Strength Grading exercise is on evaluating the business and financial risks of the concerned ship building company. ICRA forms an opinion on a shipbuilder’s business risk by analysing, among other factors, its operating environment, delivering capabilities of its shipyard, scalability (in relation to business plans), and management and systems. Financial risk is assessed through an evaluation of factors including the shipbuilder's liquidity position, profitability, coverage and capitalisation profile.
ICRA Financial Strength Grading Scale for Shipbuilders
Financial Strength Grade 1 Highest financial strength
Financial Strength Grade 2 High financial strength.
Financial Strength Grade 3 Adequate financial strength
Financial Strength Grade 4 Moderate financial strength
Financial Strength Grade 5 Inadequate financial strength
Financial Strength Grade 6 Weak financial strength
Financial Strength Grade 7 Poor financial strength
Financial Strength Grade 8 Lowest financial strength
The methodology for the Grading of shipbuilding entities entails analysis of all relevant risks under two broad categories: business risk and financial risk. The assessment process commences at the request of the entity concerned. Once the mandate letter is received from the entity, a team of ICRA analysts takes up the task of preparing a report on that entity, highlighting its business and financial risks. Subsequently, the team prepares a report and presents it to the Rating/Grading Committee for assignment of grade. The whole process is highly interactive. ICRA ensure strict confidentiality of all information collected during the assessment process.