India Ratings and Research (Ind-Ra) has downgraded The Bombay Burmah Trading Corporation Limited’s (BBTCL) long- term issuer rating to ‘A+’ from ‘AA’. The outlook is negative.

Simultaneously, the rating agency has assigned “A+” rating, with negative outlook, for the company’s proposed non-convertible debentures (NCDs) issue aggregating ₹100 crore.

The rating downgrade and the negative outlook reflect a sustained elevated consolidated net leverage (net debt/ earnings before interest, taxes, depreciation & amortisation; FY23: 1.49x, FY22: 1.96x, FY21: 0.30x) due to increase in external debt to support group entities, according to an Ind-Ra statement uploaded by BBTCL on the exchanges.

“Ind-Ra expects the leverage to remain elevated over the near-to-medium term.

“The downgrade also considers an insolvency proceeding of Go Airlines India Limited (GoAir; 33 per cent associate), a Securities and Exchange Board of India’s (SEBI) action to ban Bombay Dyeing and Manufacturing Company Limited (BDMCL; 44 per cent associate) and its promoters from the securities market for two years, and continued EBITDA losses at the BBTCL standalone level,” per BBTCL’s regulatory filing.

However, the ratings benefit from the consistent upstreaming of dividends from Britannia Industries Limited (BIL) to BBTCL. BBTCL holds 50.54 per cent indirect stake in BIL.