New Delhi [India], June 27 (ANI): CARE has downgraded the rating on the long-term bank facilities of Bharat Heavy Electricals Ltd (BHEL) to AA from AA-plus while reaffirming the outlook to stable.
The rating on its short-term facilities has been reaffirmed at A1-plus.
The primary reason mentioned by CARE is a decline in execution of orders further aggravated with the outbreak of Covid-19, the effect of which is likely to continue on account of labour migration and logistics issues.
The will be deterioration in operating margins and elongated working capital cycle besides increasing contract assets due to the adverse payment terms in orders.
In addition, CARE said there is a high concentration of BHEL orders in the thermal power segment that is beset with overcapacity, declining competitiveness and weak financial profile of state utilities.
Government-owned BHEL's equipment accounts for 60 per cent of the power generated in India. (ANI)