Credit Analysis & Research (CARE) has downgraded the rating to the long-term bank facilities of Binani Industries (BIL) from 'BBB-' to 'BB' of Rs 4.32 billion.

The rating revision takes into account the significant weakening of the financial risk profile of its key subsidiary, Binani Cement (BCL), on weakening of the financial risk profile of its key subsidiary, Binani Cement (BCL), on account of attachment of BCL's bank accounts by the Sales Tax Department, Rajasthan, on non- payment of dues as well as significant underperformance of BCL during 9MFY14.

The rating continues to be constrained by the continued underperformance of its subsidiaries resulting in losses for BIL for FY13 (refers to the period April 01 to March 31) and weak capital structure on account of debt-funded acquisitions. Delay in stake sale of BCL, proceeds of which are proposed to be utilised to pare debt, further constrains the rating.

The rating continues to factor in the long track record and diversified business operations, experience of the promoters in the cement, zinc and glass fibre businesses and a strong brand image. 

Change in the risk profile of BCL and the ability of BIL to monetize its stake in key subsidiaries in a timely manner remain the key rating sensitivities. 

Consequent to the revision in the rating of BIL, the ratings of the following companies were also revised, as the rated bank facilities of these companies are backed by an unconditional and irrevocable corporate guarantee extended by BIL.

Shares of the company declined Rs 0.4, or 0.55%, to settle at Rs 72.75. The total volume of shares traded was 4,655 at the BSE (Tuesday).