India Ratings downgrades state-owned RINL’s term loans to default grade

India Ratings has downgraded the rating assigned to state-owned Rashtriya Ispat Nigam Ltd’s (RINL) Bank Facilities from ‘BB+’ to ‘D’ on delay in the servicing of principal and interest repayment of term loans to June 30, 2024. The instruments with ‘D’ rating are in default or are expected to be in default soon.

Rating action reflects public sector company RINL’s delay in debt servicing of its term loans of Rs  410.5 crore that was due up to 30 June 2024.

This was consistent with Ind-Ra’s Default Recognition and Post-Default Curing Period Policy. The regularisation was yet to be done as on July 5, 2024, India Ratings said in a statement.

Ind-Ra continues to assess the standalone profile of the company while factoring in implicit support from the government of India’s parentage for RINL.

RINL’s liquidity is poor because of low-to-negative EBITDA generation against its significantly high debt repayment obligations. Furthermore, there have been delays in the receipt of funds for assets that have already been monetised and in its monetisation plans for other assets, India Ratings said.

In the past, the company’s losses had been funded by additional short-term borrowings, which mounted significantly over FY17-FY20, the rating agency said.

The company’s free cash balances were around Rs 19.7 crore in Fy24 (provisional) as against Rs 2.7 crore in Fy23.

Established in 1982, RINL is a Navratna Central Public Sector Enterprise under the ministry of steel with its registered office at Visakhapatnam, Andhra Pradesh.

It is an integrated manufacturer of long steel products, with a liquid steel manufacturing capacity of around 6.3mtpa. It also has a 541.6MW captive power plant.

First Published: Jul 09 2024 | 8:26 PM IST