India Ratings has downgraded the rating of state-owned Rashtriya Ispat Nigam Ltd's (RINL) Bank Facilities to 'D' from 'BB+' due to delays in servicing principal and interest payments on term loans up to June 30, 2024. The 'D' rated instruments are in default or are expected to default soon.

The rating action reflects state-owned RINL's delay in servicing its Rs 410.5 crore term loans due on June 30, 2024.

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This was in line with Ind-Ra's policy on default detection and post-default treatment, which was yet to be resolved on July 5, 2024, India Ratings said in a statement.

Ind-Ra continues to assess the company's standalone profile, taking into account the implicit support of the Indian government for RINL.

RINL's liquidity is poor due to low to negative EBITDA generation compared to significantly high debt repayment obligations. In addition, there have been delays in receiving funds for already monetized assets and in monetization plans for other assets, said India Ratings.

In the past, the company's losses were financed by additional short-term loans, which increased significantly between 2017 and 2020, the rating agency said.

The company's free cash balance was around Rs 19.7 crore (provisional) in FY24 as against Rs 2.7 crore in FY23.

Established in 1982, RINL is a Navratna Central Public Sector Enterprise under the Ministry of Steel and is headquartered at Visakhapatnam, Andhra Pradesh.

It is an integrated manufacturer of long steel products with a liquid steel production capacity of around 6.3 million tons per year. The company also has its own power plant with a capacity of 541.6 MW.