Credit Rating Information Services of India Ltd (Crisil) has downgraded the non-convertible debenture issues of Essar Oil by a notch to `D' from `C', indicating that the company has defaulted in payment of principal and interest.
Crisil has stated that the revised rating indicates that Essar Oil has defaulted on the instrument as a significant portion of the residual funding for its Vadinar refinery project remains untied.
The default grade has been assigned to two debenture issues worth Rs 565 crore and Rs 200 crore, respectively. The former, issued at 14 per cent, was placed in 1995 and was due to mature in 2003.
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Crisil officials say that the company defaulted on its semi-annual interest payment which was due on June 30. The company has not yet raised the Rs 200-crore NCD for which it has taken the rating from Crisil.
While downgrading Essar Oil from BB+ to C in April this year, Crisil had stated, "The revision in rating is mainly attributable to a significant portion of the residual funding for the refinery project remaining untied. This has resulted in Essar Oil facing difficulties in debt servicing of the outstanding non-convertible debentures in a timely manner."
At the time of the previous downgrade, FIs had sanctioned long-term funding of Rs 571 crore and short-ter