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Chinchwad civic body gets top Crisil rating

Our Regional Bureau / Mumbai January 17, 2006

Credit rating agency Crisil has assigned a provisional AA+ stable rating
to the Rs 200 crore long-term debt issue of Pimpri-Chinchwad Municipal
Corporation (PCMC).
In the past, PCMC has funded its capital expenditure entirely from its
revenue surplus, helping it maintain its debt-free status.

Over the medium term, Crisil expects PCMC to continue funding its capital
expenditure mainly out of a mix of government grants (under the National
Urban Renewal Mission), and its own revenue surpluses.

Consequently, it is likely to maintain low indebtedness in future as well.
PCMC’s high financial flexibility is defined by self-reliance in revenues,
with no dependence on state government for revenue grants, and large
liquid investments.

These rating strengths are, however, to an extent offset by PCMC’s
inadequate development of alternative sources of revenue such as property
tax, water charges, and other non-tax revenues. This exposes PCMC to
revenue concentration risk.

This concentration assumes importance as octroi collections tend to be
cyclical since they are closely linked to the level of economic activity,
whereas property tax collections are more stable and have a broader base