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Three weeks after it slashed the credit rating of Jindal Steel and Power (JSPL) to below investment grade, Crisil has downgraded the firm to “default” grade.
In a rating update put up on its website late evening on Wednesday, CRISIL said that it has cut both the short-term and long-term rating of the company to “CRISIL D” from “CRISIL A4+”and “CRISIL BB+”, respectively. The ratings have also been removed from “watch with Negative implications”.
On Thursday, JSPL issued a statement stating that the reduction in credit rating merely presents rating downgrade on technical grounds and that the firm met all its commitments till November-December 2015, and is exploring various options with lenders to reschedule payments.
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Debt worth Rs 32,638 crore has been lowered. This includes Rs 14,199 crore of term loans, and Rs 6,860 crore of short-term and long-term loan facilities, among other instruments.
The rating downgrade was on account of delays by JSPL in payment of interest on its term loans due to weakened liquidity.
“Liquidity deteriorated significantly as the steep fall in steel realisations coincided with high debt repayment obligations. Pressure on liquidity intensified further due to delays in materialisation of asset monetisation plans and refinancing of debt,” said CRISIL in the rating note.
It noted that JSPL’s steel business remains vulnerable to volatility in demand and in prices of metal, while its power business is susceptible to demand and price volatility in the merchant market and lack of raw material integration. FE
