Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 99.66 Crs. of Rajputana Stainless Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (13 Apr 2020) |
Present | ||
| Fund Based | 55.00 | 64.66 | Long Term |
BWR BBB- (Stable)
Reaffirmed |
BWR BBB -
/Stable Reaffirmation |
| (12.50) | (12.50) | Short Term |
BWR A3
Reaffirmed |
BWR A3
Reaffirmation |
|
| (5.00) | (5.00) | ||||
| (5.00) | (5.00) | ||||
| Non Fund Based | 35.00 | 35.00 | Short Term |
BWR A3
Reaffirmed |
BWR A3
Reaffirmation |
| (5.00) | (5.00) | ||||
| (5.00) | (5.00) | ||||
| (2.00) | (2.00) | ||||
| (5.00) | (5.00) | ||||
| Grand Total | 90.00 | 99.66 | (Rupees Ninety Nine Crores and Sixty Six lakhs Only) | ||
The ratings of Rajputana Stainless Ltd (‘RSL’ or the ‘Company’) have been reaffirmed to BWR BBB-/A3 on account of the extensive experience of the promoters, long standing relations with the customers and suppliers, and modest scale of operations. The ratings have also taken into consideration the average financial risk profile, susceptibility of margins to volatility in the raw material prices, and competition in the industry.
The ratings have been assigned a stable outlook on account of the various steps taken by the Government to boost the sector by allowing 100% FDI and by introducing the National Steel Policy which envisions the growth trajectory of the Indian Steel Industry over the coming years, supporting the industry with the aim of improving the production and consumption.
BWR believes that Rajputana Stainless Ltd business risk profile will be maintained over the medium term.
KEY RATING DRIVERS
Credit Strengths:
Adequate experience of promoters in the line of activity with established track record in the business as the Company is active for more than two decades.
The Company is backed by healthy & stable relations maintained with the customers and suppliers, who have been associated with the Company for over 10 years.
The Company registered a revenue of Rs 427.29 Cr as per FY21 provisionals which is almost in line with the Company's pre- covid level performance.The company has registered a revenue of ~ Rs 198.53 Cr until, June 2021 and they have a continuous flow of orders to provide revenue visibility for the future.
Credit Risks:
The Company has gearing of 1.17x in FY20 and as per FY21 provisionals. Thye have subdued margins with the NPM and OPM standing at 0.50% and 4.66% as per FY21 provisionals as opposed to 1.01% and 5.21% respectively in FY20. Modest coverge ratios with the ISCR and DSCR standing at 1.65x and 1.14x respectively in FY21 provisionals as compared to 1.85x and 1.59x respectively in FY20.
The margins of the Company are susceptible to the volatility in the raw material prices. The Company’s margins have strong linkages to the overall economic growth and demand for steel. BWR believes that the Company might be affected by the downside risks faced by the steel industry in the wake of COVID-19 resulting in receding demand, inventory pile up, demand- supply imbalance etc adversely affecting the revenues and profitability.
Low entry barriers for initial investment and ease of operations have led to proliferation of innumerable small entities in the steel industry. Intense competition from these players limits the pricing flexibility and bargaining power of players.
For arriving at its ratings, BWR has considered the standalone performance of Rajputana Stainless Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward the Company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity will be the key rating sensitivities.
Positive: The rating may be upgraded if the Company is able to achieve significant growth in revenue and profitability backed by a favourable industry scenario and optimum utilisation of capacities, and sustained improvement in working capital management.
Negative: The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.
LIQUIDITY INDICATORS - Adequate
The current ratio of the company stands at 1.12x as per FY21 provisionals as opposed to 1.02x in FY20. The company has an unencumbered cash balance of Rs 7.02 Cr in FY20 and Rs 7.47 Cr in FY21 provisionals. The cash accruals of the company stood at Rs 7.02 Cr in FY20 and at Rs 5.74 Cr in FY21 provisionals which is more than sufficient to meet the long-term debt repayment obligations of the company for FY20. The average CC utilization for the last 6 months is between 95-100%. The Company also has GECL limits amounting to Rs 9.66 Cr availed from both banks which adds to the liquidity cushion.
ABOUT THE ENTITY
The Company was set up in 1991 as Rajputana Castings Pvt Ltd by Mr. Om Prakash Agarwal. In 1999, the company was acquired by Mr. Shankar Lal Deep Chand Mehta and Mr. Babu Lal Deep Chand Mehta and was renamed in 2006. The company manufactures mainly stainless steel products like billets, rolled round, hex, square, flats, wire rod, wire etc (website: SS bars, Billets, angles, wire rods, forged ingots, etc.). The company also manufactures alloy steel products.
The company has its registered office and manufacturing facility, both located at 213, Madhwas, Halol Kalol Road, Kalol, Dist. Panchmahals, Gujarat - 389330, India.
The company has in house facility of Melting, Refining, Casting, Rolling, Drawing and Converting into Bright.
The company’s products are mainly used in Infrastructure, Automobile, Engineering sector.
Company’s Quality Management Systems are certified to be in compliance under ISO 9001:2008 and have been awarded the prestigious “TUV” Certification.
Company sells its goods through its Marketing offices located at Vadodara and Mumbai. In addition to that the company has various dealers across India.
The company is also having a Windmill with the installed capacity of 2.1 MW which helps to offset power consumed at the main plant.
| Key Parameters | Units |
FY 20-21 (Provisional) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 427.49 | 431.94 |
| EBITDA | Rs.Crs. | 19.92 | 22.51 |
| PAT | Rs.Crs. | 2.12 | 4.37 |
| Tangible Net Worth | Rs.Crs. | 62.28 | 60.15 |
| Total Debt/Tangible Net Worth | Times | 1.17 | 1.17 |
| Current Ratio | Times | 1.12 | 1.02 |
NA
NA
ANY OTHER INFORMATIONNA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 64.66 |
BWR BBB-/Stable
(Reaffirmation) |
13Apr2020 |
BWR BBB- (Stable)
(Reaffirmed) |
22Feb2019 |
BWR BBB- (Stable)
(Upgraded) |
23Mar2018 |
BWR BB+ (Stable)
(Downgraded) |
| Fund Based | ST | NA |
NA
|
13Apr2020 |
BWR A3
(Reaffirmed) |
NA |
NA
|
NA |
NA
|
| FB SubLimit | ST | (12.50) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| (5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| Non Fund Based | ST | 35.00 |
BWR A3
(Reaffirmation) |
13Apr2020 |
BWR A3
(Reaffirmed) |
22Feb2019 |
BWR A3
(Upgraded) |
23Mar2018 |
BWR A4+
(Downgraded) |
| NFB SubLimit | ST | (5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| (5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (2.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (5.00) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| Grand Total | 99.66 | (Rupees Ninety Nine Crores and Sixty Six lakhs 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Saloni Ramprakash Singh Rating Analyst Board : +91 22 2831 1426, +91 22 2831 1439 saloni.s@brickworkratings.com |
Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | IDBI Bank | Cash CreditSanctioned | 17.50 | _ | 17.50 | |
| 2 | IDBI Bank | ILC/FLCSanctioned | _ | 12.50 | 12.50 | |
| Sub-Limit (BG (Inner limit to LC)) Sanctioned | (5.00) | |||||
| Sub-Limit (BG/SBLC) Sanctioned | (5.00) | |||||
| Sub-Limit (LER) Sanctioned | (2.00) | |||||
| 3 | IDBI Bank | GECLSanctioned | 2.92 | _ | 2.92 | |
| 4 | Punjab National Bank | Cash CreditSanctioned | 37.50 | _ | 37.50 | |
| Sub-Limit (Bill Discounting) Sanctioned | (12.50) | |||||
| Sub-Limit (FOBP/FOUBP/FABC) Sanctioned | (5.00) | |||||
| Sub-Limit (PC) Sanctioned | (5.00) | |||||
| 5 | Punjab National Bank | ILC/FLCSanctioned | _ | 22.50 | 22.50 | |
| Sub-Limit (ILG) Sanctioned | (5.00) | |||||
| 6 | Punjab National Bank | GECLSanctioned | 6.74 | _ | 6.74 | |
| Total | 64.66 | 35.00 | 99.66 | |||
| TOTAL (Rupees Ninety Nine Crores and Sixty Six lakhs Only) | ||||||
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