ICRA assigns negative outlook to RInfra’s 2 road projects
Reliance’s Trichy-Dindigul and Trichy-Karur infrastructure projects assigned negative outlook by ICRA
Reliance Infrastructure has suffered a setback. ICRA, which is a credit ratings agency, has assigned a negative outlook to long term fund-based limits of its two road projects – Trichy-Dindigul and Trichy-Karur.
The projects are located in South India. Negative outlook to Trichy-Dindigul is assigned as the traffic is estimated to fall below RInfra’s estimates and Trichy-Karur has suffered 12.4% cost overrun and has also experienced delays and changes in alignment of the project.
A RInfra spokesperson informed “There is positive growth in traffic on our roads, but the overall macro economic condition of the country is weak. Road projects have long gestation periods and take time to start generating returns on equity. Both projects are successfully completed despite several challenges.”
TD Toll Road, a wholly owned subsidiary of RInfra is implementing 88.27 Km Trichy-Dindigul project. The project has a long-term fund-based limits of Rs.322 crores. In future, the performance of the project will be based on traffic growth rates. Currently, as the traffic is declining, the project has been assigned rating BBB-.
As observed above, Trichy-Karur project has a major problem of cost overruns. The project has been assigned rating BBB-.
Negative outlook indicates that the ratings may soon suffer a downgrade if performance of the projects does not improve soon.
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