KIOCL ratings downgraded, withdrawn amid operational challenges and financial weakening

Brickwork Ratings India Private Limited has downgraded and withdrawn the long-term and short-term ratings for KIOCL Limited's bank loan facilities, totaling ₹1,050.00 crore. The long-term rating was revised to BWR A-/Negative (Withdrawn) and the short-term rating to BWR A2 (Withdrawn). This action follows the full repayment and closure of the company's fund-based limits, as confirmed by a No Due Certificate and a No Objection Certificate from the lender.

The rating revision was prompted by a significant weakening in KIOCL's operating performance during FY25 and H1 FY26, marked by a sharp decline in revenues and sustained operating losses. Total operating income fell to ₹590 crore in FY25 from ₹1,858 crore in FY24, a 68% decrease due to subdued export demand and a 232-day operational shutdown. OPBDIT remained negative at ₹-200 crore in FY25, and the net loss widened to ₹-205 crore.

Despite these challenges, KIOCL maintains a strong capital structure, remaining debt-free with ₹1,001 crore in tangible net worth in FY25 and robust liquidity of ₹730 crore in cash and equivalents. The company also benefits from strong government support as a Public Sector Enterprise and is developing the Devadari iron ore mine to enhance raw material supply and reduce costs. The outlook, however, remains Negative due to continued operational volatility and uncertainty regarding full recovery.