Mumbai: Ratings agency Icra Ltd has downgraded Rs4,570 crore of IL&FS Transportation Networks Ltd’s (ITNL) outstanding debt of the total of Rs7,570 that it maintains a rating on.
All the ratings are placed under watch with developing implications, according to a press release from Icra.
The downgrades in the rating take into account the weakening of ITNL’s financial risk profile with more than anticipated increase in debt levels driven by funding commitments (equity and sub-debt) towards under-construction BOT (build-operate-transfer) projects and additional funding support required for some of the operational BOT projects, the note added.
“The ratings are also constrained by the high refinancing risk given sizable near-term debt repayment obligations and exposure to forex risks with respect to un-hedged debt contracted in subsidiaries and guaranteed by ITNL, namely Elsamex SA and Chongqing YuHe Expressway Company Limited, an operational toll-road in China," it said.
At 2.27pm, ITNL shares were up 3.01% to Rs54.70 on BSE, while IL&FS Engineering and Construction shares gained 6.27% to Rs33.05.
In February, India Ratings had also placed ITNL’s non-convertible debentures on “negative outlook" because of uncertainty on the company’s deleveraging plans.
ITNL is a surface transportation infrastructure company and the largest private sector road operator in India under the build-operate-transfer model. In FY17, it reported revenue of Rs34,007 crore and debt of Rs1,16,702crore.
For the December quarter, the company reported a net profit of Rs60.34 crore.
Speaking to analysts earlier this year, Dilip Bhatia, CFO of ITNL, had said that the company plans to monetise the Chinese asset by divesting around 34% out of 49% that it holds.
“This will be around $200 million and this will help us reduce debt. At the standalone level, we keep looking at opportunities in terms of monetizing our matured assets. I would not want to give the specific names of the projects, but over the next four to five quarters, we are looking at a cash flow of around ₹ 600 Crores to ₹ 700 Crores to ITNL, in terms of asset monetization."