Jharkhand Road Projects Implementation Company (JRPICL) is a subsidiary of IL&FS Transportation Networks Ltd (ITNL), which had a rating of BB (SO)/Watch Negative.
"The downgrade reflects non-payment of interest and principal obligations on Crisil-rated NCDs that were due on January 21, 2019, as confirmed by the trustee (IDBI Trusteeships Ltd) and investors. This is on account of non-adherence to the structured payment mechanism, despite adequate funds in JRPICL's escrow account," the rating agency said in a statement.
Rating D is assigned by Crisil to instrument, which are in default or are expected to be in default soon.
Crisil had earlier highlighted heightened risk of default due to reversal in the IL&FS management's earlier stance of maintaining the integrity of JRPICL's ring-fenced structure and structured payment waterfall.
"Invocation of NCLAT's stay order by JRPICL to withhold regular debt payment is not only a reversal of the management's previous stance, but also challenges the legal standing of the ring-fenced nature and bankruptcy remoteness of the SPV. Because of this, despite having adequate cash surplus, JRPICL has defaulted on its debt obligation," it noted.
The development comes at a time when another rating agency Icra has placed the ratings of six mutual fund schemes under watch with negative implications due to their exposure to the crippled infra lender IL&FS group entities.
The schemes being put under watch include a short term debt funds and banking and PSU debt funds from HDFC, banking and PSU debt fund, bond fund, dynamic bond funds from UTI, Aditya Birla Sun Life short term opportunities fund, Icra said in statement Tuesday.