Smartd Error: 1 Currently unreadable (pending) sectors

I am encountering following error in /var/log/messages:

Aug 15 03:55:42 hostname smartd[2366]: Device: /dev/sda, 1 Currently unreadable (pending) sectors

Which cause the / partition to be mounted as read-only. The server is accessible anyway but you cant do anything much inside. Lets troubleshoot this.

Collecting Information/Troubleshooting

I see read-only filesystem mounted when creating a test file in /root directory:

$ touch /root/testfile
touch: cannot touch `/root/testfile': Read-only file system

What is SMART daemon (smartd)?

Self-Monitoring, Analysis and Reporting Technology (SMART) system built into many ATA-3 and later ATA, IDE and SCSI-3 hard drives. The purpose of SMART is to monitor the reliability of the hard drive and predict drive failures, and to carry out different types of drive self-tests. We will use smartctl command to help us find out what is wrong with the disk.

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