Kingswood Industries Pvt. Ltd. (Erstwhile Kingswood Suppliers Pvt. Ltd.)

Brickwork Ratings upgrades the long-term rating and removes the rating from ISSUER NOT COOPERATING* category for the Bank Loan Facilities of Rs. 40.00 Crs. of Kingswood Industries Pvt. Ltd. (Erstwhile Kingswood Suppliers Pvt. Ltd.)

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (07 Oct 2024)	Present
Fund Based	40.00	40.00	Long Term	BWR C Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR BBB - /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Grand Total	40.00	40.00	(Rupees Forty Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings has upgraded the long-term rating to 'BWR BBB-/Stable' from "BWR C" and removed the rating from Issuer Not Cooperating* category for the bank loan facilities of Kingswood Industries Pvt. Ltd. (Erstwhile Kingswood Suppliers Pvt. Ltd).

The Rating has factored, inter alia, the experienced management with long track record of operations, well-established customer and supplier portfolio with healthy order book position and Improvement in scale of operations. However, the rating is constrained by thin profitability margins, moderate level of debt protection metrics, high customer concentration and intensely competitive nature of the industry. Going forward, the ability of the company to Improve their operational scale, profitability, and credit profile would be the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Kingswood Industries Pvt. Ltd. (Erstwhile Kingswood Suppliers Pvt. Ltd.)., the business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Management with long track record of operations :

  The company has been present in the market for more than 3 decades though some changes in the firm's constitution took place in earlier years. They are managed by qualified and experienced promoters, which has supported consistent operational growth over the last three fiscals—reflected by a CAGR of 24.87% in traded sales during FY2023–FY2025. The group is among the largest players in pulpwood trading in South India.

• Strong relationship with healthy order book position. :

  The company has a well-established customer and supplier portfolio, as evidenced by its operational track record over the past few years, during which it achieved consolidated operating income of Rs. 485.72 Cr in FY2024 and Rs. 450.98 Cr in FY2025. As of April 2025, it has secured a consolidated order book of Rs. 520.00 Cr, of which Rs. 350.00 Cr is from West Coast Paper Mills.

• Growth in scale of operations :

  The consolidated operating performance has significantly improved, as reflected by an increase in operating income from Rs. 289.22 Cr in FY2023 to Rs. 450.98 Cr in FY2025 with a CAGR of 24.87% in traded sales during FY2023–FY2025.

Credit Risks:

• Thin profitability margins resulting in weak debt protection metrics :

  Consolidated profit margins remain low, with an operating margin of 0.75% in FY2024 and 1.14% in FY2025, primarily due to high cost of goods sold, along other operating expenses. This has resulted in weak debt protection metrics, as reflected by an ISCR of 1.96 times in FY2024 and 3.11 times in provisional FY2025, and a current ratio of 1.41 times in FY2024 and 1.02 times in FY2025.

• High customer concentration :

  In FY2024 and FY2025, more than 80% of the operating income was generated from two customers, indicating a high level of customer concentration. Although KIPL’s sales remain largely concentrated with West Coast Paper Mills, the company holds strategic importance, having been a long-standing supplier with a strong track record of high valued order fulfillment.

• Intensely competitive nature of the industry with stress on pricing leading to low profitability :

  The pulpwood industry operates in an intensely competitive environment, with numerous regional and national players. This competition exerts significant pricing pressure, leaving limited flexibility to improve profit margins. Fluctuations in raw material and freight costs further strain margins. As a result, consolidated profit margins have remained low in recent years.

ANALYTICAL APPROACH - Consolidated

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). BWR has principally relied upon the consolidated financials of Kingswood Industries Pvt. Ltd. and Kingswood Enterprises up to audited FY24, Provisional FY2025 and Projected FY2026, FY2027. This is because both entities have common management and are engaged in a similar line of business. Moreover, BWR has also relied upon publicly available information and clarification/information provided by the Company.

RATING SENSITIVITIES

The company's ability to Improve their operational scale, profitability, strengthen liquidity and credit profile would be the key rating sensitivities.

Positive: 

• The rating may be upgraded if the operating margin increases significantly by approximately 5%, accompanied by sustained increase in revenues and a strengthened liquidity profile.

Negative: 

• The ratings could be downgraded if there is a decline in the business and financial risk profile, specifically due to a ~10% decrease in revenue and a ~20% reduction in profitability margins.
• Decrease in the total revenue, EBITDA and profits of Audited FY2025 by more than ~05% from the provisional figures.

LIQUIDITY INDICATORS - Adequate

The liquidity position is considered adequate, owing to the satisfactory financial performance of both entities in FY2024 and provisional FY2025. During these years, the group comfortably covered its interest expenses with more than sufficient EBITDA. As per the projections, the company is well positioned to service its financial obligations in the coming years. Furthermore, debt protection metrics remained moderate, with an ISCR of 1.96 times in FY2024 and 3.11 times in FY2025. The current ratio stood at 1.41 times in FY2024 and 1.02 times in FY2025. Conversion cycle was negative of -5days in FY2024 and -29days in FY2025, primarily due to days payable exceeding days receivable. Additionally, the company reported an average overdraft utilization of just 0.88% over the past three months.

Considering all these factors, the liquidity position is assessed as "Adequate".

ABOUT THE ENTITY

Kingswood was originally established in 1989 as a proprietary concern. It was later incorporated as Kingswood Suppliers Private Limited in 2013 and subsequently renamed Kingswood Industries Private Limited (KWIPL) on May 10, 2019. The company’s Registered and Corporate Office is located in Bengaluru with branches 
located in the states of Karnataka, Tamilnadu and Andhra Pradesh. It is engaged in Purchase and Sale of pulpwood species like Eucalyptus, Silver Oak, Melia Dubia, Subabul and Acacia wood sourced from farmers and supplying to integrated Paper mills located in South India. The company has wood banks and has widespread network of 40 wood collection depots with added facility for processing of wood. It holds 80% share in the pulpwood market of Karnataka and the company is in this business over last 30 years. Mrs. Mubeena and Dr. Faizan Ali Khan are the directors of the company.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited)	FY 23 - 24 (Audited)	FY 24 - 25 (Provisional - Annual)
Operating Revenue	Rs.Crs.	60.74	345.43	331.89
EBITDA	Rs.Crs.	0.83	1.52	3.61
PAT	Rs.Crs.	0.74	0.96	2.27
Tangible Net Worth	Rs.Crs.	33.01	33.97	36.24
Total Debt / Tangible Net Worth	Times	0.36	0.01	0.01
Current Ratio	Times	5.42	1.68	1.03

KEY FINANCIAL INDICATORS (Consolidated)

Key Parameters	Units	FY 22 - 23 (Audited)	FY 23 - 24 (Audited)	FY 24 - 25 (Provisional - Annual)
Operating Revenue	Rs.Crs.	289.22	485.72	450.98
EBITDA	Rs.Crs.	2.51	3.66	5.15
PAT	Rs.Crs.	2.14	1.45	2.90
Tangible Net Worth	Rs.Crs.	38.58	40.03	40.34
Total Debt / Tangible Net Worth	Times	0.74	0.50	0.49
Current Ratio	Times	2.24	1.41	1.02

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

None

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	40.00	BWR BBB-/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	07Oct2024	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	09Oct2023	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	04Jul2022	BWR B-Stable (Downgrade/ISSUER NOT COOPERATING*)
Grand Total		40.00	(Rupees Forty Crores Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Trading Companies

Analytical Contacts
Mohammed Farzan Rating Analyst mohammed.f@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com	Customer Support | CustSupport@brickwrokratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	Canara Bank	Secured OD - Sanctioned	35.00	_	35.00	Simple##
2	Canara Bank	Secured OD - Proposed	5.00	_	5.00	Simple##
Total			40.00	0.00	40.00
TOTAL (Rupees Forty Crores Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.