Gammon India is currently undergoing restructuring due to the invocation of strategic debt restructuring (SDR) by its lenders. (Gammon India is currently undergoing restructuring due to the invocation of strategic debt restructuring (SDR) by its lenders.)
Gammon India is currently undergoing restructuring due to the invocation of strategic debt restructuring (SDR) by its lenders.
(Gammon India is currently undergoing restructuring due to the invocation of strategic debt restructuring (SDR) by its lenders.)

CARE Ratings downgrades Gammon India’s bank facilities to ‘D’

CARE Ratings downgrades long-term and short-term bank facilities of Gammon India from ‘C’ and ‘A4’ to a ‘D’ or a default rating

Mumbai: Ratings agency CARE Ratings on Wednesday downgraded the long-term and short-term bank facilities of infrastructure company Gammon India Ltd of 10,355 crore from ‘C’ and ‘A4’ to a ‘D’ or a default rating. The agency has also reaffirmed its ‘D’ rating on Gammon India’s long-term bank facilities of 949.05 crore and on non-convertible debentures (NCD) issue of 324 crore owing to delays in servicing of interest on NCDs, over-drawals in fund-based limits and devolvements in non-fund-based limits.

Instruments with a ‘D’ rating are in default or are expected to be in default soon, according to CARE Rating’s definition.

Gammon India is currently undergoing restructuring due to the invocation of strategic debt restructuring (SDR) by its lenders.

The liquidity position of the company is constrained due to delay in recoveries from customers, project execution delay resulting in holding of high inventory, thereby blocking working capital funds and causing cost overruns, CARE Ratings said in the 20 April statement.

Gammon India has been restructuring its nearly 15,000 crore of debt through the corporate debt restructuring mechanism since September 2013. In December 2015, Mint reported that lenders to Gammon India will be converting 245 crore worth of debt to a 60.10% equity stake under SDR norms.

“The company has provided corporate guarantee for repayment to non-convertible debenture holders principal and interest payments of Metropolitan Infra Housing Pvt. Ltd (subsidiary of GIL), which is currently, invoked," CARE Ratings said.

In the nine months period from 1 January 2014 to 30 September 2014, Gammon India had reported standalone total income of 3,691 crore and a net profit of 68 crore.

The infrastructure company constructs roads, bridges, flyovers, power plants, chimneys and structures for hydro-electric power projects, buildings and factories. Its subsidiary Gammon Infrastructure Projects Ltd executes public private partnership-based projects in roads, port and power sectors under special purpose vehicles.

Earlier this month, Gammon India said it accepted a proposal from Thailand-based GP Group to invest about 250 crore in its civil EPC (engineering, procurement and construction) business.

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