Rating agency CRISIL
has affirmed the default "D" rating for bank loans to Lanco Infratech
Ltd (LITL), a debt-laden construction company against whom lenders have begun insolvency proceedings.
The rating continues to reflect delays in meeting debt obligations. The delays were due to weak liquidity, and the rating is based on limited information available in public domain, CRISIL
said in a statement on Tuesday.
In June 2017, the Reserve Bank of India had directed IDBI Bank, the lead bank to LITL, to initiate the corporate insolvency resolution process for the company under the Insolvency and Bankruptcy Code, 2016. The matter is before the National Company Law Tribunal's Hyderabad Bench.
The company's fund-based outstanding exposure was Rs 8,146 crore and non-fund based outstanding exposure stood at Rs 3,221 crore as on March 31, 2016.
At a standalone level, LITL's net loss was Rs 890 crore on total operating income of Rs 1,635 crore in financial year 2016-17. It had posted a net loss of Rs 445 crore on operating income of Rs 2,669 crore in financial year 2015-2016.
For arriving at the ratings, Crisil
has combined the business and financial risk profiles of LITL and Griffin Coal, a venture in Australia, together referred to LITL. This is because they have strong business linkages.
LITL has been delaying its debt repayments since financial year 2012-13. Its cash accruals have been inadequate for meeting the repayments due to weak profitability and stretch in its working capital requirements, Crisil
LITL was originally incorporated in 1993 as Lanco Constructions Ltd in Secunderabad, Telengana; its name was changed in 2000.
The company provides engineering, procurement, and construction (EPC) services, largely to its own subsidiaries and affiliated entities. The Lanco group includes subsidiaries and affiliates operating across the infrastructure sector, including construction, power, EPC, infrastructure, and property development.