On 20th March, S&P had downgraded the long-term corporate credit rating on Rolta India to ‘B+’ from ‘BB-’ over expectations of an increase in its leverage and concerns that free operating cash flows will move into the negative zone in the next 12 months

And today, Fitch has downgraded Rolta India's Long-Term foreign and local-currency Issuer Default Ratings (IDRs) to 'B' from 'BB-'. The outlook is negative. At the same time, it also downgraded the rating on Rolta LLC's USD 127 million, 10.75 percent senior unsecured notes (due 2018) and Rolta Americas LLC's USD 367 million, 8.875 percent senior unsecured notes (due 2019), and Rolta's senior unsecured rating to 'B' from 'BB-' and assigned Recovery Ratings of 'RR4'.

Fitch has stated in the report, “"The downgrade reflects our expectations that Rolta's leverage and liquidity will weaken due to lower-than-expected cash generation and high receivable days. We expect its CFO - adjusted leverage to deteriorate to over 7.0x for the financial year ending March 2016 (FY16) - higher than the 5.0x level at which we would consider negative rating action."

Fitch expects the leverage to remain around 5.0x-6.0x during FY17-18, as receivable days could increase to 170-180 days (FY16 estimated: 163 days) given most of its revenue growth is driven by orders from the Indian central and state government.

Naturally, the stock price is taking this news on its chin – intra day the stock price slipped over 3% to Rs.74.50 levels and remains firmly in the red. Its 52-week low is at Rs.66.90.