INSUBCONTINENT EXCLUSIVE:
MUMBAI: In more troubles for the crippled ILFS group, India Ratings Tuesday downgraded the long-term issuer rating of a group company, ILFS
Environmental Infrastructure and Services (IEISL), and placed its ratings under watch
The agency has also downgraded the ratings of various debt instruments to 'BB'
Rival rating agency Icra had last month junked the ratings of most of the group companies
The downgrade by India Ratings reflects a similar rating action on its parent ILFS following the default on repayment of commercial papers
Monday, ILFS Financial Services defaulted on interest payments of commercial papers, which were due on that day
On September 14, ILFS, which is unbale to service most of its over Rs 91,000 crore debt, had defaulted on a Rs 105-core CP redemption
"The recent developments at ILFS will affect IEISL's financial flexibility with regards to raising fresh equity and debt," the rating
ILFS holds 97.54 per cent stake in IEISL and has provided equity and debt to it, giving financial flexibility in terms of repayment of debt
The parent's liquidity tightness poses challenges to IEISL in meeting its immediate debt liabilities, it said, adding the possibility of
the rollover of its borrowings has diminished significantly in the short term
Although ILFS plans to raise about Rs 8,000 crore in equity and debt, and monetise some assets, the timeliness of the debt and equity
raising and proceeds from the divestment is critical, the rating agency said
It said ILFS would require immediate liquidity support to honour its debt obligations in a timely manner
IEISL also plans to raise equity of Rs 238 crore through rights issue to part pay ILFS' debt
IEISL is into waste processing business and is of strategic importance to ILFS to serve its social objectives
