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View all search resultsPefindo downgrades INKA’s rating amid commuter train delivery delays
KAI recently announced maintenance for seven new trains produced by INKA, resulting in the cancellation of 17 Commuter Line trips in Greater Jakarta starting Monday.
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An LRT Jabodebek train made by state-owned train manufacturer PT Industri Kerata Api (INKA) is pictured in this file photo. (Twitter.com/BPPT RI )
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ndonesian rating agency Pemeringkat Efek Indonesia (Pefindo) has downgraded the rating of state-owned trainmaker PT Industri Kereta Api (INKA) to idBB from its previous idA-, while maintaining a negative outlook.
“The rating action reflects heightened pressure on INKA’s business profile and weakening credit metrics due to prolonged delivery delays on the Kereta Commuter Indonesia [KCI] project, which have constrained INKA’s cash flow and resulted in its inability to make timely payments to its suppliers,” Pefindo stated in a rating summary published on Aug. 27.
Pefindo said that INKA’s rating still reflected the company’s established market position in domestic rolling stock manufacturing. However, the rating was limited by the firm’s heightened liquidity risk, challenges in project execution and high dependence on a single customer.
The rating agency warned of another downgrade “if delays in the KCI and other ongoing projects persist”, as it could further weaken the company’s profitability, cash flow generation and leverage metrics due to a rising interest burden, cost overruns and additional debt-funded working capital needs.
However, Pefindo noted a possibility of a revised outlook to stable without rating changes, provided INKA could resolve the KCI delivery issues, execute and deliver projects on a sustained and timely basis without significant disruptions, while maintaining “a financial profile consistent with the current rating category”.
Read also: KAI signs MoU with INKA on rolling stock, services
In 2022, KCI, which is a subsidiary of PT Kereta Api Indonesia (KAI), signed a memorandum of understanding (MoU) with INKA to procure 16 Commuter Line trains of 12 cars each, with the first delivery expected in 2024.
