Icra downgrades Piramal holding firm's debt rating, cites liquidity crunch

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The ratings of debt raised by AASAN Corporate Solutions (ACSPL), a Ajay Piramal group firm, was downgraded on Friday by Moody’s India affiliate ICRA, citing tight liquidity conditions faced by the company. 


In a statement, ICRA said the revision in the rating to “A-(CE) (Negative)” from “A+(CE) (Negative)” for the non-convertible debenture (NCD) programme worth Rs 1,900 crore of ACSPL is mainly because of deterioration in the operating environment owing to tight liquidity in the market, which may diminish the resource mobilisation ability of the holding, investment entities to raise funds from the market. ICRA has rated Rs 2,850 crore worth of debt raised by ACSPL.


The downgrade comes at a time when group flagship Piramal Enterprises is planning a rights issue worth Rs 3,650 crore and the promoter entities are expected to contribute to the right issue as per their 44 per cent shareholding in the company. Piramal also announced it would underwrite the entire right issue.


The family office entities in the Piramal Group, ICRA said, have a combined liquidity of Rs 400 crore as of June 30, 2019. The guarantors, SKT and PRL, do not have any external debt and it is the largest shareholder in PEL and has flexibility to raise funds by liquidating its shareholding in PEL, if required. SKT and PRL together hold 44 per cent equity in PEL as of September 30.


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