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PTI mumbai India
Updated: 26-11-2018 20:06 IST

Citing muted sales and weak

perform ace of the group's real estate business, rating agency

Icra has downgraded long-term ratings assigned to diversified

firm Shapoorji Pallonji's Rs 18,500-crore fund-based and

non-fund based bank facilities.

The agency has downgraded the rating assigned to the

Rs 18,500-crore fund-based and non-fund based bank facilities

to AA from AA+ and has reaffirmed the short-term rating

at A1+.

It has also reaffirmed the short-term rating of A1+ on

the Rs 2,500 crore commercial paper (CP) programme, it said in

a statement issued Monday.

"The rating has been downgraded on account of muted

sales and continued cost pressure, which has led to weak

performance of the group's real estate portfolio and

slower-than-anticipated progress on asset monetisation,"

Icra said.

This, along with the funding support provided to the

group and subsidiary companies, primarily real estate SPVs,

has resulted in an increase in the standalone

borrowing levels, contrary to the agency's expectations of

a reduction.

Also, the debt availed by various SP group real estate

entities for which Shapoorji Pallonji has extended debt

service reserve account guarantee is exposed to refinancing

risks given that the projects would take time to generate

commensurate cash flows, it said.

Recently, the company announced its plans to raise

around USD 1 billion by bringing outside investors into its

solar unit, as a part of its strategy to reduce debt.

"With strong order inflows in the last two fiscals,

the company had an order book of Rs 36,000 crore as on

September 30, 2018. The well-diversified order book across

sectors, geographies and clientele provides revenue visibility

in the near to medium term and reduces order book

concentration risk. It also provides decent revenue visibility

in the medium term," Icra added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)