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 account (DSRA) guarantee, is exposed to refinancing risks, as the projects would take time to generate commensurate cash flow.Monetisation of its information technology park at Chennai and the solar energy portfolio took place in the recent past. Proceeds from the IT park, says ICRA, are expected to be used for reducing debt at the ...
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