A worker uses a blowtorch at the excavation site of a launching shaft for Metro Line 3, in the Dharavi area of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

CARE Downgrades Reliance Infrastructure’s Debt

CARE Ratings has downgraded long-term and short-term debt and non-convertible debentures of Reliance Infrastructure Ltd. citing delays in monetisation of assets and its proposed debt-reduction plan.

The credit rating agency said it expects the Anil Ambani-led company’s ability to service its debt to become weaker. “The downgrade is accompanied by credit watch with negative implications, as against the previously envisaged developing implications.”

High debt levels have strained Reliance Infrastructure’s financial and liquidity profile, said the rating agency. Inflow of funds appear limited in the engineering, procurement and construction business due to lack of significant new projects and external contracts, it said.

A lag in monetisation of road assets and delay in raising of capital through qualified institutional placement has held back Reliance Infra’s debt-reduction plan. “Continued support extended to group companies and associates in the form of loans and advances is impacting the financial risk and liquidity of the company,” said the rating agency.

Revised Ratings

  • Long-term bank facilities worth Rs 3,700 crore demoted to A- from A+.
  • Short-term facilities of Rs 1,500 crore have been rated A2+, from the previous A1+ rating.
  • Long-term non-convertible debentures in three categories – worth Rs 800 crore, Rs 1,200 crore and Rs 200 crore – have been reduced to an A- rating from A+.