TAGVK Hotels & ResortsHyderabad, Sep 28: Rating agency ICRA has Downgraded TAJGVK Hotels & Resorts Limited long-term loans and short-term credit facilities.
The low rating was on account of expected decline in revenue and margins during this financial year, the hotel chain said.
In a filing with stock exchanges on Monday, the ICRA downgraded TAJGVK Hotels long-term loans aggregating Rs 165.63 crore and short-term, fund-based limits (Rs 30 crore).
The companys earnings would be weak during Q2 FY 2021 and this trend is expected to continue over the next several quarters with continued muted demand, the rating agency said.
With sharp fall in operating profits, the debt coverage indicators are likely to deteriorate in FY 2021, ICRA further said.
The company’s reported meagre revenues of Rs 3.3 crore and operating losses in Q1 FY 2021 owing to the pan-India lockdown resulted in only one of its six properties apart from Taj Santacruz, which is under a JV with a GVK group company, being operational during the period.
The moratorium on debt servicing extended by the RBI for the period of March-August 2020 aided TAJGVK in tiding over the financial stress during the period.
With the moratorium coming to an end and accruals continuing to be weak, the company has applied for the loan restructuring for a period of two years with its lenders.
If approved by the lenders, this would provide a liquidity cushion to the company for debt servicing, it said.
While ICRA notes that the company has adequate funds in the form of undrawn working capital lines and fixed deposits for meeting its operational commitments in the near term, the company would need incremental debt/equity as the recovery gets prolonged, the rating agency added. (PTI)
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