ICRA has revised downwards the long-term rating assigned to Rs. 31.66 crore term loans, Rs 2.84 crore unallocated bank lines loan and the Rs. 67.00 crore fund-based bank facilities of KM Sugar Mills Limited(KMSML) to [ICRA] D (pronounced ICRA D) from LC+ (pronounced L C plus). ICRA has also revised downward the short term rating assigned to Rs 2.00 crore non fund based bank facilities of KM Sugar Mills Limited to [ICRA] D (pronounced ICRA D) from A4 (pronounced A four). The ratings principally reflect the weak liquidity of the company which has resulted in continued delay in repayment of its term loan obligations and high utilisation of its bank lines. The company's liquidity has been under pressure following significant losses in Sugar Year (SY) 2010* due to sharp correction in sugar realizations from March 2010 and the resultant decline in conversion margins (given the high rates at which cane was contracted in SY 2009-10) resulted in significant pressures on the profitability of the company. The liquidity position of the company continues to remain stretched owing to large losses which in the backdrop of large debt repayment have burdened the existing cash flows. However the company has been able to improve its performance in first two quarters of SY 11 with the company witnessing profits at net level in both the quarters. During SY 10, around 5.22 lakh quintals of sugar were produced as compared to 4.57 lakh quintals during the last season. However, the company registered sale of 4.2 lakh quintals of sugar for Rs 115.68 crore during SY10 as compared to sale of 5.37 lakh quintal of sugar for Rs 116.79 crore in last seasons. This coupled with lower higher of sugarcane over last year impacted the margins negatively. KMSML reported a net loss of Rs.18.33 crore on an operating income of Rs. 179.73 crore in Sugar Year 2010.However in the first six months of SY 2011 the company reported operating income of Rs 155.50 crore with profit after tax of Rs 1.88 crore.