Karvy's liquidity to remain under pressure: Crisil

Hyderabad: Rating agency Crisil has said Karvy group's liquidity will remain under pressure over the medium-term because of large working capital requirements.

According to Crisil, the outlook on liquidity is negative. Its net cash accrual may remain healthy at Rs 120 - 140 crore per annum but the sizeable annual repayment obligations of Rs 42-53 crore, along with stretched working capital cycle, will continue to exert pressure on liquidity, the rating agency said.

Crisil has downgraded its ratings on the bank facilities and non- convertible debentures (NCDs) of Karvy Data Management Services (KDMSL) from "BBB+/negative" to "BB+/Negative".

The downgrade in the overall ratings reflects the weakening of the KDMSL group's financial risk profile, especially liquidity.

The weakening of profile is on the account of increasing working capital requirements, primarily due to delays in realisation of receivables and raising funds.

A delay in realisation of receivables, especially from the Andhra Pradesh government and increase in realisation period from large customer in subsidiaries' contact center business, exerts pressure on the group's liquidity.

Execution of big government projects and their realisation will remain key monitorables, Crisil said.