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Investing.com -- ANI Technologies Pte. Ltd. (ANI Tech), the operator of a ride-hailing platform based in India, has seen its cash reserves shrink due to increased operational spending. The heightened competition in the ride-hailing industry has necessitated more expenditure on incentives to preserve market share. This has led to negative EBITDA (earnings before interest, taxes, depreciation, and amortization) and operating cash flow, following two years of positive earnings.
On May 9, 2025, S&P Global Ratings reduced ANI Tech’s issuer credit rating from ’B-’ to ’CCC+’, along with the issue rating on a secured term loan B raised by its subsidiary, Ola Netherlands B.V. The downgrade reflects ANI Tech’s weakened liquidity due to ongoing operational cash burn.
The Indian ride-hailing industry, which continues to grow rapidly, remains highly competitive. Major players like ANI Tech and Uber Technologies Inc . (NYSE:UBER), along with regional companies such as Roppen Transportation Services Pte. Ltd. (Rapido), are making significant outlays on incentives to attract and retain customers.
Given the low transaction size (less than $2.5 per ride) and an increasing number of customers across ride-hailing services, ANI Tech is expected to report negative EBITDA and negative operating cash flow in fiscal 2025 (ending March 31, 2025) and fiscal 2026.
The ongoing cash burn has negatively affected ANI Tech’s capital structure. There is growing concern about the company’s ability to meet its IPO deadline. ANI Tech has postponed its IPO plans since 2020. If it fails to secure an extension of the IPO deadline from its CCPS (Compulsorily Convertible Preference Shares) holders, these holders could exercise their rights in the absence of an IPO.
ANI Tech has a history of securing timely extensions of the deadline. However, recent unfavorable market conditions, weakness in the company’s business operations, and uncertainty on leadership and strategy due to high management turnover could hinder such efforts.
ANI Tech has been relying on funding from investors in the form of CCPS, which S&P Global Ratings views as debt-like. This is due to the lack of permanence and the presence of investor exit rights if an IPO doesn’t occur by the stated deadline. As of March 31, 2024, ANI Tech had about INR195 billion (approximately $2.3 billion) in CCPS outstanding, accounting for about 95% of the company’s adjusted debt.
The company’s liquidity could weaken significantly in a short period. ANI Tech is unlikely to withstand event risks, such as significant cash burn in operations or shareholders’ exercising exit rights, leading to an accelerated repayment of the outstanding secured term loan B. This could increase liquidity pressure. The company is also highly dependent on a successful IPO to meet obligations to CCPS holders.
ANI Tech has been experiencing a high turnover of senior management, leading to frequent changes in company strategy and impacting strategic planning and execution. For example, the company ceased food deliveries in fiscal 2023 but re-entered the segment within two years through a partnership with the Open Network for Digital Commerce (ONDC).
The negative outlook reflects S&P Global Ratings’ view of ANI Tech’s weakening liquidity amid ongoing operational cash burn. This could affect the IPO process, increase the risk of an exit by CCPS holders, and limit alternative funding options.
S&P Global Ratings could further lower its rating if ANI Tech’s cash balance significantly deteriorates over the next three to 12 months. This could occur if the company continues to generate negative operating cash flows, with no clear path to return to profitability.
The inability of ANI Tech to raise further capital due to loss of shareholder support, IPO failure, or CCPS exits could also lead to a downgrade. However, the outlook could be revised to stable if ANI Tech’s operations turn around and the company is expected to generate positive free operating cash flows. This could happen with strong revenue growth and reduced spending on incentives. A stable outlook would also require an improvement in ANI Tech’s liquidity, including the risks of an immediate CCPS exit dissipating.
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