Ind-Ra upgrades ratings for Lodha Developers group company Macrotech

Macrotech Developers' leverage and sales are expected to improve from FY22, helping its outlook

India Ratings and Research (Ind-Ra) has upgraded the rating for Macrotech Developers Ltd’s (MDL) debt instruments from “BB” to “BBB”, reckoning the Lodha group company’s liquidity will improve.

Ind-Ra resolved the Rating Watch Negative (RWN) said the outlook is stable. The resolution of the RWN reflects the timely and successful refinancing of MDL’s London debt with longer maturities and a manageable domestic refinancing scenario.

The expectation of a further improvement in MDL’s liquidity position follows obtaining extensions on its domestic loans under the scheme for the date for commencement of commercial operations (DCCO). It also takes into account the likely inventory financing for its completed projects over December 2020-March 2021.

The upgrade also factors in Ind-Ra’s expectation of an improvement in MDL’s leverage and sales efficiency FY22 onwards.

Ind-Ra continues to take a consolidated view of MDL and all its subsidiaries and special purpose vehicles including Lodha Developers UK Ltd. (LDUK), along with the latter’s subsidiaries (London Projects) while arriving at the ratings. These companies operate in the same line of business and under a common management.

Until FYE20, the London operations were consolidated under MDL. In FY20, MDL entered into an agreement to sell 24 per cent of the issued capital in LDUK to a promoter-held group company. LDUK ceased to be a subsidiary of MDL under IND AS 110 Consolidated Financial Statements and will be accounted under the equity method of accounting. MDL owns 51 per cent in LDUK now (previously 75 per cent).