Credit ratings agency Moody's today cut Indian Oil Corp's credit rating to the lowest investment grade on a fall in the company's profitability.
Moody's downgraded IOC to Baa3 from Baa2, it said in a statement.
It, however, retained IOC's debt outlook at stable.
The rating downgrade reflects material decreases in IOC's profitability as a result of continued government restrictions on raising fuel prices, which hindered IOC's ability, the largest refiner in the country, to fully pass through the cost of oil, Moody's said.
As the cost of oil has increased, the imapct of such restrictions has grown substantially, despite some mitigating measures undertaken by the government, it added.
IOC yesterday reported a 71 per cent dip in its net profit for the first quarter of fiscal 2009 at Rs 415.13 crore, down from previous year's Rs 1,468.41 crore.
The company currently loses Rs 413 crore on sale of petrol, diesel, domestic LPG and kerosene as the government has not allowed it to pass the rise in input costs.