The agency has, however, has placed the ratings on 'watch with negative implications'.

India Ratings and Research stated that the upgrade reflects an improvement in STLL's consolidated credit profile, with its EBITDA increasing in FY24, supported by an improvement in the coal transportation and coal mining segments.

However, the company's debt remained elevated despite a reduction and the agency expects the debt to decline over FY25-26, led by scheduled debt repayments.

India Ratings believes STLL's ability to make scheduled debt repayments in FY25 depends on the ramp up and profitability of its overseas coal mining operations.

The rating agency has placed the ratings on Rating Watch with Negative Implications following a lack of clarity on the final resolution of its Oceania Resources (ORPL)'s deed administrators and the possibility of the invocation of the corporate guarantee (CG).

STLL had provided a CG worth $70 million to its step-down subsidiary, ORPL, against the term loan of $60 million which was extended to Griffin Coal Mining Company (GCMC) for ramping up its coal production.

ORPL was placed under voluntary administration in October 2023 by way of director's resolution on account of a delay in debt servicing. Post-voluntary administration, the deed of company arrangement allows the deed administrators to conduct further investigations into ORPL's business, property and affairs for up to 12 months to explore the possibility of a restructure or recapitalisation to determine the likely outcome for the creditors based on their best interests.

India Ratings will continue to monitor the final outcome of ORPL's deed administrators and the liquidity situation in the short term.

Sindhu Trade Links engages in the business of transportation services, along with the trading of oil and lubricants. Its subsidiaries are engaged in automobiles and spare parts, bio-power generation and coal mining operations.

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