Wipro Finance has securitised assets worth Rs 30 crore and has also placed Rs 25 crore convertible preference shares with the Industrial Credit and Investment Corporation of India (ICICI).
The company is also in advanced stages of negotiations with its bankers for converting the demand loan component amounting to Rs 73 crore into a five-year term loan. The repayment will be in equal quarterly installments, and this is expected to improve the maturity profile of its assets and liabilities.
Duff & Phelps, the rating agency, has noted in its rating watch that the falling debt exposure as the term loan is paid is in line with the company's plans to gradually bring down the credit exposure over the years.
The rating agency noted that the main risks of the company are the following _ the company's ability to generate enough cash flows from its non-fund based operations will determine the company's sustenance. Secondly, any further growth in substandard asset level will pose major stress on the company's already strained maturity profile.
The company is leveraged at 7.58 as at March 31, 1998. The management's decision to gradually shift towards non-fund based activities will reduce the gearing in future, Duff & Phelps noted. It added that the company's short term exposure to short term borrowings and inadequate short term assets cover poses a stress on the short term maturity profile of the company.
The rating agency said that Wipro Finance, which is a subsidiary of Wipro Ltd, is undertaking a strategic business shift from spread based lending activities to corporate and retail segments through value added syndication activities.
Duff & Phelps has given a rating of Ind A (so) FD to the company's fixed deposits programme. It said that the rating was constrained by the very high level of substandard assets and the consequent provisioning and the strained maturity profile of assets and liabilities.
