Mumbai: Credit rating agency Care Ratings on Saturday downgraded Baba Ramdev-led Patanjali Ayurved Ltd ( PAL) to A- from A+ on concerns over weakening financials. In the rating rationale, Care attributed the company's weakened financial profile to large outflow of funds from the company to Patanjali Consortium Adhigrahan Private Ltd, a special purpose vehicle created for the acquisition of Ruchi Soya industries Ltd, which is into edible oil business.
Last month, Ruchi Soya informed the exchanges that the National Company Law Tribunal (NCLT), Mumbai in its order dated September 6 approved Patanjali's ₹4,350-crore resolution plan with certain modifications that were accepted by the bidder.
As of March 2019, Patanjali Ayurved had a net worth of Rs. 2873 crore.
The order states the funds infusion from PAL in the SPV shall be in form of Non-convertible Debentures and Preference shares aggregating Rs. 900 crore and further equity infusion from the group is to the extent ₹204.75 crore (which at an aggregate level is much larger than the earlier committed amount of ₹100 crores by PAL), the rating firm said
The revision also factors in PAL’s higher exposure by way of loans and advances/equity investments to the group entities. PAL continues to be the largest corporate entity in the Patanjali group and hence a sizable load of the RSIL acquisition (excluding debt from banks) will be borne by the PAL balance sheet, the rating firm added.