Citing muted product sales and weak perform ace of the group’s true estate company, rating company ICRA has downgraded extended-term ratings assigned to diversified firm Shapoorji Pallonji’s Rs 18,500-crore fund-based mostly and non-fund based mostly bank facilities.
The company has downgraded the rating assigned to the Rs 18,500-crore fund-based mostly and non-fund based mostly bank facilities to AA from AA+ and has reaffirmed the brief-term rating at A1+.
It has also reaffirmed the brief-term rating of A1+ on the Rs two,500 crore industrial paper (CP) programme, it mentioned in a statement issued on November 26.
“The rating has been downgraded on account of muted product sales and continued cost pressure, which has led to weak overall performance of the group’s true estate portfolio and slower-than-anticipated progress on asset monetisation,” ICRA mentioned.
This, along with the funding support supplied to the group and subsidiary businesses, largely true estate SPVs, has resulted in an improve in the standalone borrowing amounts, contrary to the agency’s expectations of a reduction.
Also, the debt availed by various SP group true estate entities for which Shapoorji Pallonji has extended debt service reserve account assure is exposed to refinancing hazards provided that the projects would take time to create commensurate cash flows, it mentioned.
Just lately, the company announced its ideas to increase about USD one billion by bringing outdoors investors into its solar unit, as a component of its approach to reduce debt.
“With powerful purchase inflows in the final two fiscals, the company had an purchase guide of Rs 36,000 crore as on September thirty, 2018. The properly-diversified purchase guide across sectors, geographies and clientele offers revenue visibility in the near to medium term and reduces purchase guide concentration risk. It also offers respectable revenue visibility in the medium term,” ICRA additional.