Rating agency ICRA has downgraded Shapoorji Pallonji and Company Private Ltd's (SPCPL) long-term rating from "AA-" to "A+" due to the slower-than-anticipated progress achieved in terms of its deleveraging plans through equity infusion and asset monetization.
Ratings have been removed from watch with developing implications and 'Negative' outlook assigned.
ICRA has noted that the promoters have infused a total of about Rs 2,270 crore in SPCPL during H1FY2020, including around Rs 1,900 from the proceeds of the Sterling & Wilson Solar Limited (SWSL) Initial Public Offering (IPO).
However, contrary to expectations, the net debt levels have not come down because the same has been deployed to meet the funding requirements of several group companies, especially in the real estate business. The money has been deployed for meeting their debt obligations and construction finance to complete the ongoing projects.
ICRA said there has been reduction in contingent liabilities like financial guarantees from Rs 2,942 crore in March 31, 2019 to Rs 2,412 crore in September 30, 2019, through a combination of funds from SPCPL and project level cashflow linked debt.
The increase in standalone debt has also been on account of elongation in the working capital cycle given the slow realisation of receivables and high inventory levels, especially for EPC projects from Andhra Pradesh government, it added.