India Ratings & Research (Ind-Ra) has upgraded IVRCL long-term issuer rating to 'B+' from 'D'. The outlook is stable. The upgrade reflects the approval of the company's corporate debt restructuring (CDR) package, under which the existing irregularities have been converted into long-term loans, a moratorium on interest and principal payments has been granted and fresh funds have been sanctioned.

IVRCL has received a moratorium on interest payments on term loans till September 2015 and on cash credit facility till December 2014. Repayments on term loans will start from March 2016. The interest during the moratorium period is being funded through a funded interest term loan facility and is to be converted in to equity. The company has also received a fresh term loan sanction of Rs 1.75 billion to clear statutory and employee dues and kick-start execution.

The success of the CDR package depends on the company's ability to ramp up execution and raise funds through sale of land and build-operate-transfer (BOT) projects and equity, leading to an improvement in EBITDA interest cover to above 1x by FY17 (FY14: 0.27x).

The company's revenue was under pressure during FY14 and 1HFY15 due to the lack of working capital for execution. EBITDA margins were low too due to under-absorption of overheads. However, revenue and profitability are likely to pick up post the implementation of CDR. The company’s order book of Rs 183.26 billion at end-September 2014 provides strong revenue visibility.

Under the CDR package, the company is required to achieve revenue of Rs 57.28 billion in FY15, Rs 76.78 billion in FY16 and Rs 77.53 billion in FY17 with EBITDA margin of 7.3%, 8.3% and 9.5%.

Also, under the CDR package, the company is required to raise Rs 1.47 billion through equity and Rs 2.14 billion through the sale of assets in FY15, Rs 2.89 billion in FY16 and Rs 10.40 billion in FY17. While the company has already brought in the required equity, it plans to raise further equity of Rs 1.5 billion by FYE15. The funds raised will be used for the under-construction BOT projects and to execute the order book.

Shares of the company declined Rs 0.1, or 0.6%, to trade at Rs 16.65. The total volume of shares traded was 79,773 at the BSE (10.33 a.m., Tuesday).