Shares in India's Gati tumble after credit rating downgrade (updated)

Allcargo Gati

08/10/2018 14:47

Oct 8 (Reuters) - Shares in India's Gati Ltd  GATI.NS 
closed down 10 percent on Monday after ratings agency CARE
downgraded the credit rating for the logistics company, citing a
drop in profitability and decline in revenue from operations.
    CARE cut its rating on Gati's long-term bank facilities to
BBB from A-, and downgraded short-term bank facilities to A3+
from A2+, according to a regulatory filing https://www.bseindia.com/xml-data/corpfiling/AttachLive/b6a9665c-bbcb-4b4f-8832-cc3e66570552.pdf.
    Shares in Gati, which focuses on courier work, fell as much
as 12.9 percent in the session before closing just off its lows.
    Investors are paying closer attention to rating downgrades
after the government rescued shadow banking firm Infrastructure
Leasing & Financial Services (IL&FS), whose rapid decline
spooked investors and sent Indian markets lower.  urn:newsml:reuters.com:*:nL4N1WH20Z  
    The rating agency said Gati had raised additional debt in
the fiscal year leading to higher repayment obligations in this
fiscal year.
    The ratings agency said it was also taking account of the
risk associated with support extended by Gati to a hydro power
company, Gati Infrastructure.
    Gati said in its June quarterly report that it had extended
a loan to the unit worth 200.1 million rupees ($2.70 million),
and was "confident" of recovering the funds in due course.
    Gati had also said it gave operational advances worth 201.5
million rupees to parties, which is "long overdue and the full
recoverability of which is doubtful." 
    Gati said late on Monday that its "management does not
envisage any risk arising from the corporate guarantee extended
to Gati Infrastructure Pvt Ltd."
    It also said volumes and performance were expected to
improve in the upcoming Indian festive season.
    
    ($1 = 74.0450 Indian rupees)

 (Reporting by Sharnya G in Bengaluru
Editing by Rashmi Aich and Edmund Blair)
 ((Sharnya.G@thomsonreuters.com; +91 806749 1480; Reuters
Messaging: sharnya.g.thomsonreuters.com@reuters.net))