Rationale

 The rating factors in the continued delays in debt servicing by Jayaswal Neco Industries Limited (JNIL) with the account continuing to be designated as a non-performing asset (NPA) by its lenders. The share of Assets Care & Reconstruction Enterprise Limited (ACRE) in JNIL's total debt after loan sell-off by its existing lenders stood at 99.6% as on April 30, 2021. ICRA notes that the restructuring scheme for JNIL by ACRE is yet to be finalised. The terms of the restructuring agreement would drive JNIL's liquidity profile going forward. In FY2018, the State Bank of India filed an insolvency application against JNIL in the National Company Law Tribunal (NCLT) following the rejection of debt restructuring plan by the Reserve Bank of India (RBI). JNIL, in return, filed a writ petition in the Supreme Court, which directed the NCLT to maintain status quo in the insolvency process initiated against the company vide its order dated April 16, 2018. The matter continues to be at pre-admission stage in the NCLT. The provisional attachment of JNIL's Rs. 307.6-crore sponge iron facility by the Enforcement Directorate (ED) has been put on stay by the Appellate Authority. JNIL's investment in the greenfield sponge iron and captive power projects in Bilaspur, Chhattisgarh also remains stuck, which continues to adversely impact its return on capital employed (ROCE). This investment was declared as non-core asset by the lenders a couple of years back. Since then no fresh investment has been made by the company towards the same. The company has provided for impairment of this project as on March 31, 2020 which was appearing under CWIP. While there has been improvement in JNIL's operating performance in Q2 and Q3 FY2021 (after being adversely impacted in Q1 FY2021 due to the Covid-19 pandemic), led by improved demand in the end-user segments as well as increased steel prices, its liquidity position continues to remain stretched on account of elevated debt levels. The ratings, however, favourably factor in JNIL's integrated nature of operations and the location-specific advantage of the company's plants. The provisional rating of [ICRA]A3(CE) outstanding for the proposed non-fund based-facility of Rs. 300 crore has been withdrawn in accordance with ICRA's policy on the withdrawal and suspension of credit ratings as the proposed facility is not sanctioned. ICRA is withdrawing the rating and it does not have information to suggest that the credit risk has changed since the time the rating was last reviewed