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
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,"
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
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.)