Patanjali faces delays in Nagpur Plant project
Ayurvedic fast-moving consumer goods brand Patanjali has faced delays at its Nagpur plant and the project’s long-term loan rating has been downgraded by Brickwork Ratings due to the slowdown.
Brickwork Ratings has downgraded Patanjali’s Rs 360 crore ($54.1 million) loan from BWR A+ (CE) to BWR BBB+ due to delays due in part to troubles with an existing lender, TNN reported. Patanjali is in the process of developing a production and packaging plant on a 234 acre plot of land in Mihan, Nagpur and it is intended to greatly increase Patanjali’s production capabilities.
“Owing to the required term loan not being tied up as yet, project implementation remains tardy,” Brickwork Ratings said in a statement, as reported by TNN. “Thus, the ability of the company to achieve timely financial closure required for project implementation according to the revised commercial operation date would remain crucial for the rating.”
“Till date, it has already incurred Rs 406 crore (Rs 140 crore debt and Rs 265 crore equity) and needs to raise another Rs 220 crore through debt funding to complete the rest of the project,” said Brickwork Ratings.
Patanjali retails a wide range of natural personal care and beauty products as well as other product categories. A study by the consumer research firm Kantar Worldpanel in August reported that the brand’s urban sales decreased by 2.7% during the 12 month period that ended in April 2019, compared to 21.1% growth a year before. According to the study, the business did see rural sales continue to grow in the same time period, but at the much reduced rate of 15.7% compared 45.2% a year earlier.
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