Fitch Upgrades Kotagala Plantations to ‘B-(lka)’; Outlook Stable

Lanka Business Online reports that Fitch Ratings raised Kotagala Plantations PLC’s National Long-Term Rating from CCC(lka) to B-(lka) and set the outlook at Stable. The outlet says Fitch connected the change to improved liquidity after Kotagala obtained fresh bank funding during the financial year ending March 2026 (FY26), alongside ongoing debt repayment.

Lanka Business Online reports that the company secured bank working-capital funding and completed a rights issue in FY26, directing some of the proceeds to debt settlement. It also reports that Kotagala paid off its domestic bank loans in FY26, partly using rights-issue funds, but continues to depend on more expensive broker-provided working-capital finance.

Lanka Business Online reports that debt totalled LKR1 billion in 1QFY27, matching FY26 and below LKR1.6 billion in FY25. The outlet says Fitch counted related-party payables of LKR184 million in 1QFY27, versus LKR215 million in FY26, in its debt measure. Net leverage edged up to 1.8 times in 1QFY27 from 1.5 times in FY26.

Lanka Business Online reports that Fitch sees refinancing exposure because Kotagala has no unused credit lines and has limited capacity to meet debt obligations from its own cash generation. At the close of 1QFY27, LKR109 million of cash and equivalents compared with LKR576 million in short-term debt. The outlet says free cash flow was negative in FY26, reflecting working-capital outflows and increased capital spending; Fitch expects about LKR100 million a year in FY27 and FY28, down from an average LKR270 million in FY24-FY25.

Lanka Business Online reports that Fitch also considered the company’s exposure to fluctuations in commodity prices and operating-cost increases following regulatory rises in plantation-worker wages.

Written automatically by AI from the outlets’ own reports, and not reviewed by an editor. It can be wrong — the original report is the authority.