Fitch Ratings Lanka has downgraded Kotagala Plantations PLC’s National Long-Term rating to ‘CC(lka)’ from ‘B+(lka)’.
The agency has also downgraded the National Long-Term rating on Kotagala’s outstanding listed senior secured debentures of Rs. 1 billion to ‘CC(lka)’ from ‘B+(lka)’.
The downgrade follows continued deterioration in the company’s liquidity, as its operating EBITDA weakened further in the financial year ending March 2016 (FY16) due to falling tea and rubber prices, high labour costs and poor labour productivity.
Consequently, Kotagala’s operating EBITDA of Rs. 30 million was insufficient to cover its borrowing costs of Rs. 503 million and the company had to utilise cash reserves to meet most of its financial obligations.
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