CRISIL downgrades Lanco Infratech rating to 'BB'

Rating agency CRISIL has downgraded ratings on the bank facilities of Lanco Infratech Ltd (LITL) to “BB’ from “BBB-“.

The rating downgrade reflects limited time available to build liquidity to meet large debt repayments (Rs 700 crore) between October 2012 to January 2013, CRISIL said in a statement.

The Lanco group company also needs invest (as equity) about Rs 700 crore in three power projects - Vidarbha, Babandh, and Amarkantak 3 and 4 in the near term.

If group fails to make equity investment due to stretched financial position, execution of these projects will suffer. It will impact LITL’s engineering, procurement, and construction (EPC) cash flows.

LITL is raising funds through stake sales in its road, wind power, and hydel power projects. However, in the current environment, these measures could take more than the expected time to fructify, CRISIL said.