Fitch drops Variegate to junk

Fitch Ratings said it downgraded Variegate Projects Private Ltd.'s national long-term rating to BB+(ind) from BBB-(ind) and its bank loans to BB+(ind)/F4(ind) from BBB-(ind)/F3(ind).

The outlook remains stable.

The downgrades reflect deterioration in gross adjusted debt-to-EBIDTA ratio to 3.26 times, well above the earlier negative trigger of 3 times, due to a combination of a decline in EBITDA margins and an increase in debt levels, according to the agency. The leverage was 1.06x in FY09.

Ratings reflect Variegate's track record in executing turnkey projects in the power transmission and distribution segment, with a continued focus on projects relating to rural electrification and high voltage distribution systems, the agency said.

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