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The Mumbai-based company is one of the largest realty players in the country and
also has projects in Britain.
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Operating sales in Mumbai and London were weaker by 20 per cent and 50 per cent,
respectively, compared to the agency's expectations for the nine months to December
2018, it said.
It noted that sales in Mumbai, its biggest market, were affected due to tight
liquidity conditions in the three months to December 2018, but picked up in the
March quarter, but London remains a worry due to Brexit uncertainties.
In the absence of improvement in operating sales in London, Lodha will have to rely
on asset sales in both India and London to meet its liquidity needs, it said.
Illustrating the company's debt commitments, it said Lodha has a 290 million pounds
loan maturing in December 2019 (extended from August 2019), $ 324 million in bonds
maturing in March 2020 after a $ 1 million buyback, and a further 517 million
pounds loan maturing in March 2021.
"The company's cash balance and expected operating cash flows will not be
sufficient to meet these debt repayments," it said, adding asset sales will be
crucial.
The agency said it expects the company to generate around $ 250 million from the
sale of a commercial building in New Cuff Parade n Mumbai and a retail mall in the
nearby Palava, which would provide it with net proceeds of around $ 130 million
after retiring around $ 120 million of debt.
The company is also in the midst of divesting 28 per cent equity stake in its
London properties to a third party, which could allow the company to carry out
further stake reductions, but there have been delays in the receipt of funds from
the equity stake sale.
The outlook is unlikely to return to stable so long as Lodha's ability to repay its
near-term debt remains contingent on its ability to execute asset sales, it said,
adding a ratings upgrade is not possible for the next 12-18 months.