A day after Care Ratings downgraded Reliance Capital Ltd promoted by Anil Ambani, the company said it disagrees with the rating as it has not taken into consideration the fiscal roadmap of the company, which targets to raise over Rs 10,000 crore via asset sales and cut its debt by half.
On Saturday, Care Ratings cut the firm’s long-term debt programme to BBB from A and kept it on ‘Credit Watch’ with developing implications, according to statements from Reliance Capital and the rating agency.
Reliance Capital on Sunday said it disagreed with the revision as Care didn’t fully factor in the impact of its plan to raise more than Rs 100 billion ($1.42 billion) via asset sales and “sharply cut” overall debt by more than half this fiscal.
“There has not been any adverse change in the company’s operational parameters and/or any other circumstances from the time of the last rating action just four weeks ago and hence, the latest revision is completely unjustified,” Reliance Capital statement said.
According to the statement, the company is in the process of selling its holdings in several assets to raise funds. This includes its entire stake in Reliance Nippon Life Asset Management Ltd, where it expects to realise a premium over the current market price of more than Rs 5,000 crore.
Apart from this, it is also planning to raise money by selling assets. “The company has been working diligently to ensure timely debt repayments and is regular in all its debt payments,” Reliance Capital said.
In downgrading its credit score, Care cited developments including defaults by subsidiaries Reliance Home Finance Ltd and Reliance Commercial Finance Ltd, which would likely reduce the group’s financial flexibility and diminish Reliance Capital’s ability to raise funds from the market.
Reliance Capital’s “financial risk profile is characterised by depletion of liquidity, high dependence on planned disinvestments for debt servicing and delays in fructification of such disinvestments,” Care said in its statement. It said it will closely monitor the asset-sale process and Reliance Capital’s ability to complete this in a timely manner, reduce debt and maintain liquidity would act as “key rating sensitivities.”