(Bloomberg) -- An Indian credit ratings company cut Patanjali Ayurved Ltd. by two levels, citing a likely weakening of its financial position as it partly funds a merger with a maker of soya products.
Care Ratings Ltd. downgraded Patanjali's long-term bank facilities to A- from A+, according to a statement on Friday. Care and Brickwork Ratings cut the company's outlook to negative from stable.
Patanjali Consortium Adhigrahan Pvt. -- a venture by Patanjali Ayurved and three other companies controlled by yoga guru Baba Ramdev -- is taking over Ruchi Soya Industries Ltd. for 43.5 billion rupees ($614 million).
Care said the revision in the ratings takes into account the “expected weakening of its financial risk profile on account of large outflow of funds from Patanjali Ayurved to Patanjali Consortium Adhigrahan.”
India's company court approved a bid by Patanjali Consortium last month to take over Ruchi Soya. Creditors of the cooking oil producer are set to receive a maximum of 42.4 billion rupees in repayments, a 65% haircut to their verified claims of about 121 billion rupees.
To contact the reporter on this story: Rahul Satija in Mumbai at rsatija1@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Siraj Datoo
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