Icra downgrades Shapoorji Pallonji on muted sales, continued cost pressure

The funding support provided to group /subsidiary firms had resulted in an increase in SPC's standalone borrowing levels

Rating agency Icra has downgraded Shapoorji Pallonji and Company’s (SPC’s) fund-based limit from ‘AA+’ to ‘AA’ and placed it ‘under watch’. The rating action is a sequel to muted sales and continued cost pressure. This has led to weak performance of the group’s real estate portfolio and slower-than-anticipated progress on asset monetisation. 

The funding support provided to group/subsidiary companies (primarily real estate special purpose vehicles or SPVs) had resulted in an increase in SPC’s standalone borrowing levels, contrary to Icra’s earlier expectation. Also, the debt taken by the group's real estate units, for which SPC extended a debt service reserve