India Ratings & Research (Ind-Ra) has downgraded ISMT long-term issuer rating to 'D' from 'BB+'. The agency has removed all ISMT's ratings from Rating Watch Negative (RWN). The downgrade reflects ISMT's continuing delays in debt servicing due to a stretched liquidity position. Ind-Ra has not been provided with the other details of the default.

According to management, ISMT is raising debt, and applied for term loans of Rs 4.5 billion in a joint lender forum in end-May 2014. It has received a sanction of Rs 2.03 billion as on date, which is pending disbursement. The balance Rs 2.47 billion is in an advanced stage of negotiation. Timely debt servicing for at least three consecutive months could result in a positive rating action.

ISMT is a Pune-based manufacturer of seamless tubes and ferro alloys. It has three manufacturing plants, one each in Jejuri, Baramati and Ahmednagar. Its current tube making capacity is 465,000mtpa and steelmaking capacity is 350,000mtpa.

Shares of the company gained Rs 1.85, or 9.87%, to settle at Rs 20.60. The total volume of shares traded was 164,917 at the BSE (Friday).