The above rating factors in the persistent high level of revenue and fiscal deficits of GoWB, continued high level of committed expenditure, high debt level in relation to revenue receipts, implications of the recommendations of Fifth Pay Commission on the finances of GoWB (entailing enhanced salary & pension payment together with arrear payment), improving but relatively low debt-servicing indicators, gradual increase in the pace of industrialisation in the State of West Bengal, steady growth in NSDP and steps being taken by GoWB to improve its present financial position by adopting the FRBM legislation to avail the benefits of Thirteenth Finance Commission (THFC) and contemplating various measures for increasing revenue receipts and containing revenue expenditure.
WBFC, a state financial corporation incorporated in 1954 and acting under the administrative control of the finance department, GoWB, is in the business of providing medium and long-term credit to micro and SME sector in West Bengal.
CAR improved to 8.56% as on Mar.31, 2010 from 4.03% as on Mar.31, 2009 mainly on account of infusion of equity aggregating Rs.25.8 crore in FY10 by GoWB
GoWB's fiscal position continued to remain weak with high Revenue Deficit (RD).
The rating is constrained by the intrinsic credit quality of GoWB
, the overall high business risks that a distribution company is exposed to, which includes its ability to meet the distribution loss level set by the regulator, the adverse impact on liquidity position of the company following build up of regulatory assets and its moderately high financial risk profile for the rating category.