ICRA downgrades BMTC’s Rs 1,300 crore term loans to ‘D’

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Published: September 18, 2019 2:49:28 AM

The financial performance of BMTC, which is fully-owned by the Karnataka Government, remained weak in FY19 because of continued losses and the consequent strained liquidity position.

ICRA, BMTC, market news, BMTC, Bengaluru Metropolitan Transport Corporation, Karnataka Government, tariff revisionThe stressed cash flows resulted in delays in debt servicing, despite the support received from the state government in the form of revenue and capital grants, the agency said.

Rating agency Icra has downgraded Bengaluru Metropolitan Transport Corporation’s (BMTC) Rs 1,300-crore worth of term loans to ‘D’ from ‘B – stable’ on account of the delays and irregularities in servicing of the long-term loans, based on the feedback received by the rating agency from bankers. The financial performance of BMTC, which is fully-owned by the Karnataka Government, remained weak in FY19 because of continued losses and the consequent strained liquidity position. The losses from operations over the past few years were primarily due to the lack of tariff revision in a situation of rising operating costs because of the firm fuel prices, rising employee expenses and reduced passenger load factor.

Further, the number of profit-making schedules reduced sharply during FY19, resulting in an operating loss of Rs 4.32 per km as compared to an operating loss of Rs 1.06 per km during FY18, the agency mentioned. The stressed cash flows resulted in delays in debt servicing, despite the support received from the state government in the form of revenue and capital grants, the agency said.

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