India Ratings & Research (Ind-Ra) has downgraded Kalpena Industries (Kalpena) long-term issuer rating to 'BBB+' from 'A-'. The outlook is negative. Ind-Ra has simultaneously suspended all the ratings on Kalpena.

The downgrade reflects the fact Kalpena has consistently breached Ind-Ra's negative rating guideline of the net leverage exceeding 4.5x since FY13 (year end March) based on the publicly available information. Net leverage (adjusted net debt/EBITDAR) was 6.5x in FY14 and 6.03x in FY13. Its interest coverage ratio also declined significantly to 1.83x for FY14 from 3.27x in FY12.

The negative outlook reflects the uncertainty related to pace of deleveraging over the next 18-24 months, given Kalpena's performance for FY14 and 1QFY15. EBITDA margins in 1QFY15 remained at the FY14 levels of 5.7% and interest coverage improved marginally to 2.07x.

Shares of the company gained Rs 3.65, or 3.58%, to trade at Rs 105.60. The total volume of shares traded was 9,472 at the BSE (1.10 p.m., Wednesday).