India Ratings & Research (Ind-Ra) has assigned NCC a long-term issuer rating of 'BBB-'. The outlook is stable. The agency has also assigned the company's Rs 500 million non-convertible debentures an 'BBB-' rating.

The ratings reflect NCC's comfortable liquidity position and credit metrics, following its rights issue in October 2014. The company raised about Rs 5.99 billion through the rights issue. Consequently, the company has been paying its dues within schedule 1 November 2014 onwards. The company has repaid most of the short-term loans and cleared all the irregularities, and drew Rs 2.3 billion of long-term corporate term loans, which provide a moratorium of two years on repayment, thus boosting its liquidity and reducing short-term debt servicing requirements.

NCC's liquidity position was stressed during 1HFY15 and FY14 due to a combination of high investment requirements towards its power project, a fall in EBITDA margins, bad debts and the Reserve Bank of India’s restriction on the sanction and rollover of unsecured short-term loans post 1QFY14. Such short-term loans were used by the company to fund working capital requirements. This had resulted in irregular debt servicing over April-October 2014.

In February 2014, NCC entered into definitive agreements to divest its ownership interest in NCCPPL to Sembcorp Utilities, which curtailed any further investments in the project and resulted in an immediate inflow of Rs 1.0 billion. The deal also entails a deferred net inflow of about Rs 4.72 billion contingent on the receipt of government approvals.

NCC expects to receive about Rs 7.0 billion-Rs 8.0 billion by FYE16 from the receipt of balance consideration from Sembcorp and through the sale of other road projects and land assets. Such inflow could be used to reduce debt further and thus improve the credit metrics.

Shares of the company declined Rs 3.05, or 3.6%, to trade at Rs 81.65. The total volume of shares traded was 746,072 at the BSE (12.54 p.m., Tuesday).