Capacite Infraprojects locked in 20% lower circuit on rating downgrade

India Ratings & Research has downgraded the company's long term issuer rating to 'IND D', from 'IND A'

Shares of Capacite Infraprojects (CIL) were locked in the lower circuit of 20 per cent at Rs 158.50 on the BSE in Monday's session after the rating agency India Ratings & Research (Ind-Ra) downgraded the company’s long term issuer rating to ‘IND D’, from ‘IND A’ (Negative Outlook).

Till 10:40 am, around 2 million equity shares had changed hands and there were pending sell orders for 680,000 shares on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.15 per cent at 55,413 points.

Ind-Ra said the downgrade reflects CIL’s challenges with liquidity, which led to default in the servicing of its debt obligations. The liquidity situation worsened during the time of the pandemic as the execution profile of the company deteriorated significantly, resulting in cash flow mismatches, it added.

"While the company availed of the Reserve Bank of India (RBI)-prescribed moratorium in the 1HFY21, the liquidity challenges continued in the 2HFY21. Although the company’s execution profile improved slightly in 2HFY21, it was not able to generate sufficient cash flows due to the severity of the pandemic-led lockdown in Mumbai Metropolitan Region (accounted for 91.8 per cent of the unexecuted order book including a MHADA project at FYE21; 91.9 per cent without MHADA project)," the rating agency said. CLICK HERE FOR FULL REPORT

CIL, meanwhile, on clarification on the rating provided by India Ratings and Research (Ind-Ra) said that all loan/debt facilities of all financial institutions are currently standard and regular. All the consortium banks have in the last consortium meeting held on June 30, 2021, confirmed that the account is standard and regular with them.

The promoter and management team of CIL would like to assure all stakeholders that the company has clear visibility of strong cash flows in the current and ensuing quarters and continues to execute orders for its marquee clients which will ensure timely servicing of all its debt obligations, the company said, adding that we remain committed to becoming debt-free by FY23. CLICK HERE FOR FULL REPORT