ICRA downgrades Zuari Agro Chemicals, stock falls
Zuari Agro Chemicals on Thursday informed the bourses that, rating agency ICRA has downgraded its short term and long-term funds worth Rs. 4215 crore. The long-term rating was downgraded to D from BB (Negative) earlier. While short-term also downgraded to D from A4.
The rating agency said that this downgrade is due to company's cash credit account remaining over utilised for more than 30 days owing to devolvement of a series of Letters of credit (LC) beginning April 2019 and continuing in May 2019. The company’s liquidity position has been deteriorated significantly due to cash loss of Rs. 174.0 crore in FY19.
The company will be investing around Rs. 380 crore from FY21E onwards through a debt-equity ratio of 70:30 to meet energy consumption norms. The capex is expected to keep the credit metrics subdued in the near-term.
With response to this development, the stock of Zuari Agro reacted negatively and tanked nearly 2.7 per cent to intra-day low of Rs. 151.50.