Fitch lowers Pantaloon Retail's credit rating

Rating agency Fitch has cut the credit rating assigned to Pantaloon Retail's short-term debt, reflecting the pressure on operating cash flow due to slowing sales.

Fitch said in a rating action note that Pantaloon Retail India (PRIL) was witnessing pressures in its operating cash flow and losses were continuing at some of its key key subsidiaries.

The agency has downgraded PRIL's short-term debt instruments from 'F1' to 'F2+'. The revised rating denotes a good capacity for timely payment of financial commitments, whereas an 'F1' rating indicates strongest capacity for on- time payment.

Fitch Ratings affirmed PRIL's National Long-term Rating at 'A-', which denotes expectations of a low default risk, and revised the rating Outlook to Negative from Stable, which indicates a possible downgrade action in future.

"The rating action reflects the ongoing pressure on PRIL's operating cash flows during H1FY09 due to slowing same store sales growth, primarily in lifestyle retailing and to some extent in value retailing," Fitch said.