Hit by sharp slump in business, Karaikal Port Pvt Ltd (KPPL), a unit of Chennai-based realty and infrastructure group MARG, is considering options to refinance or restructure debt. It might look for hiving off berths as terminals to get upfront money for loan repayments.
KPPL is working on several options. The company will look for terminalisation – carve out berths for inviting operators to run them as separate units. This will get us upfront money which could be used for servicing debt, executive director M L N Acharyulu told Business Standard.
Rating agency, India Ratings, has downgraded Karaikal Port’s bank loans from “BBB-“ to “BB”. The outlook on loans is negative. It also revised rating for working facility to “A4+” from “A3”. The company has availed of loans worth Rs 1,633 crore against the planned Rs 1,884 crore.
- Business underperformance hits the credit profile
- Company working on options to reduce debt burden
- At present, loan repayment is on schedule
- Loan drawdown is less than planned usage
The downgrade reflects KPPL’s lower-than-expected revenue due to underperformance (more than 50 per cent on a pro-rata basis) in the project’s cargo ramp-up. Delay in commissioning of coal-based thermal power plants in the hinterland served by the port has hit performance, India Ratings said.
Besides, the management expectations of a sharp growth of traffic from items like fertilisers, crude/petroleum, and containers have also not materialised. This is possibly due to the slowdown in the economy.
Rating agency said KPPL’s weak debt structure has accentuated pressure on its credit profile. The credit profile can be permanently repaired only through refinancing of the existing bank debt or restructuring it to reflect expected cash flows.
Acharyulu said the company had been regular on the payment front (on debt repayment obligation). The port is tapping new businesses (items) for income growth like wheat exports and iron ore imports.
During April-November 2012, the port generated a revenue of Rs 1, 77.44 crore, against the forecast of Rs 399.62 crore. It is projected to earn Rs 644.72 crore for the year ending March 2013.
Its revenues dipped due to low cargo flow of 4.52m metric tonnes (MT) during the eight-month period, against the forecast of 16m MT for the full year.