India Ratings and Research (Ind-Ra) has downgraded Safety Controls & Devices Pvt Ltd's (SCDPL's) long-term issuer rating to BB with a negative outlook from BB-plus.
The company is a leading engineering, procurement and construction contractor of sub-station and fire protection engineers in north India.
Ind-Ra said the downgrade reflects a significant decline in SCDPL's revenue in FY20, leading to deterioration in its EBITDA and credit metrics.
The revenue plunged to Rs 26 crore in FY20 from Rs 101 crore in the year-ago period due to slower pace of execution of orders. The land availability issues were further aggravated by Covid-19 led supply chain disruptions.
Till December 2020, SCDPL executed only Rs 10 crore of its order book worth Rs 269 crore. About 30 per cent of the total projects are slow-moving due to land availability issues in Bihar.
The negative outlook reflects Ind-Ra's expectation of a continued low revenue and an elongated working capital cycle in FY21, leading to weakening of the credit metrics and a further stretch in the liquidity position.
( With inputs from ANI )
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