The credit rating agency ICRA on Wednesday cut the long-term rating of Reliance Power to ‘C’ from ‘BB’ following a 'significant deterioration' in the company’s financial position.

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“The revision in the rating takes into the account the significant deterioration in the company’s financial position coupled with its stretched liquidity profile as also evident from considerable decline in the net cash accruals in FY 2018-19 and net-worth erosion due to impairment of assets amounting to about Rs. 4,170 crore,” ICRA said in a report.

As per ICRA, the liquidity profile of Reliance Power's key operating subsidiaries, namely Rosa Power Supply Company Ltd (RPSCL) and Vidarbha Industries Power Limited, continues to remain weak which in turn has impacted the surplus cash flow availability to the company.

In addition, delays in debt servicing by one of its subsidiaries Rajasthan Sun Techniques Energy Private Ltd further highlights the weak liquidity position of Reliance Power, said the rating agency.

As per ICRA, the leveraging levels for the company continued to remain high.

"This has resulted in interest expenses and associated refinancing risk. the term loans have been primarily deployed in the Special Purpose Vehicles (SPVs) and to meet the cash-flow mismatches", the report added.

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