India Ratings Maintains Negative Outlook for Infrastructure Sector

In a recent update India Ratings & Research (Ind-Ra) has maintained an overall negative outlook for the infrastructure sector for FY15. In the report the agency has mentioned that although several toll road projects and airports are likely to show some kind of stable characteristics, still the outlook for these projects especially the toll roads remains negative. It also mentions that the thermal power projects will continue to witness pressure mainly due to the unresolved offtake and issues of fuel supplies. However, the agency has said that the renewable power projects are likely to remain stable.

The published report clearly mentions that many are expecting a sharp recovery post the general elections slated to happen this year to turn the fortunes of the sector. However the view of the agency is that, "the path to a sustained recovery, if at all, will be gradual and will have to be traversed with measured steps."

The Indian government in the last 12 to 15 months had taken initiatives to improve the financials of the discoms and address the issue of fuel shortage. Though it is being addressed it will take some time for the full impact of the same to the thermal power projects.

It expects more projects in FY15 are expected to witness stress going forward. The report quotes, "the agency estimates that about INR75bn of debt within its portfolio will have to be restructured. Most restructurings initially take the form of postponement (by up to two years) of the commencement of principal amortisation before the originally envisaged commercial operations date (COD)."