Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 19.49 Crs. of Steel Space Pvt. Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (29 Sep 2020) |
Present | ||
Fund Based | 20.00 | 19.49 | Long Term |
BWR BB+ /Stable
Reaffirmation/ISSUER NOT COOPERATING* |
BWR BBB -
/Stable Upgrade |
Grand Total | 20.00 | 19.49 | (Rupees Nineteen Crores and Forty Nine lakhs Only) |
Brickwork Ratings upgrades the rating to BWR BBB- (Stable) for the bank loan facilities amounting to Rs. 19.49 Crs. of Steel Space Pvt Ltd. BWR believes that Steel Space Pvt Ltd 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 revenues and profit show sustained improvement backed by a favorable industry scenario. The rating outlook may be revised to 'Negative' if the revenues and profit margins show lower than expected figures.
BWR has essentially relied upon the audited financial statements of steel Space Pvt Ltd for FY19, FY20 and FY21, and projections for FY22 and FY23, and information/clarifications provided by the entity’s management. The rating draws strength from the experienced management and established market position, moderate scale of operations, and moderate financial risk profile. The rating is however constrained by margins susceptible to changes in the government policies and volatility in the raw material prices in international market.
Going forward the ability of the company to maintain its overall financial risk profile would be its key rating sensitivity
KEY RATING DRIVERSCredit Strengths:
Steel Space is a family run business. Mr. Lalit Gupta manages day to day operations of the business and has more than 3 decades of steel trading experience. The company has established relations with Jindal Steel Limited (JSL), BR Group etc for procurement of stainless steel (SS).
Coverage Ratios ISCR and DSCR have been improved to 2.03 times and 1.69 times respectively in FY21 as against 1.72 times and 1.14 times respectively in FY21.Current ratio of 1.36 times in FY21 is at adequate level.
The revenue increased to Rs. 371.54 Crs in FY21 to Rs.356.49 Crs in FY20.TNW is 46.23 in FY21 vs 42.23 in FY20. Gearing is low at 1.04x & 1.68. OPM is stable at 2.41 and NPM is at 1.02. Company has projected Rs 557.31 Cr Sales for the FY22. As per the sales amount from Apr21-Nov21 the company has achieved Rs. 405.27 Cr and the remaining projections company can easily achieved in FY22..Increase in operating profit in FY21 is mainly on account of increase in scale of operations. PAT in FY21 is at Rs. 3.79 Crs. Overall the performance of the company is good.
There is high level of competition, low research and developments, inadequate infrastructure, Unsustainable means of aquiring of domestic raw material
Supply of materials is from Jindal Stanless Hisaar Ltd only which reflects concentrated supplier. Customer based in Mumbai only which shows geographical concentration.
The ability of the company to successfully scale up its operations, while maintaining a comfortable financial risk profile
and adequate liquidity would be its key rating sensitivities.
Positive: The rating may be upgraded if the scale of operations, profitability and overall financial risk profile of the
company shows significant improvement.
Negative: The rating may be downgraded if there is a significant deterioration in the scale of operations and financial risk
profile affecting the debt servicing capacity of the company.
The liquidity profile of the company is adequate driven by current ratio of 1.36x during FY21. The liquidity is projected to remain at a similar level at 1.35x in FY22 and 1.6x in FY23 The cash and cash equivalents stood at Rs 5.86 Crs. as on March 2021. The Net Cash accruals of the company are Rs.8.28 and 11.23 for FY22 and FY23. These are sufficient to discharge the matured debt obligations in FY22 and FY23.
ABOUT THE ENTITYSteel Space Pvt Ltd (‘SSPL’ or ‘the company’) was incorporated in the year 2007 at Kolkata by Mr. Ram Niwas Gupta. The directors of SSPL have been in the business of trading stainless steel raw materials since 1960. The company is engaged in trading of stainless steel sheets, coils, hot roll plates, hot roll coils, cold roll plates, cold roll coils along with austenitic stainless steel, martensitic stainless steel, ferritic stainless steel and duplex stainless steel. SSPL is the authorised dealers for Jindal Stainless Limited.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 371.54 | 356.49 |
EBITDA | Rs.Crs. | 8.94 | 8.60 |
PAT | Rs.Crs. | 3.79 | 3.33 |
Tangible Net Worth | Rs.Crs. | 46.03 | 42.23 |
Total Debt/Tangible Net Worth | Times | 1.04 | 0.95 |
Current Ratio | Times | 1.36 | 1.78 |
Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 19.49 |
BWR BBB-/Stable
(Upgrade) |
NA |
NA
|
29Sep2020 |
BWR BB+ Stable
(Reaffirmation/ISSUER NOT COOPERATING*) |
06Aug2019 |
BWR BB+ Stable
(Reaffirmation) |
Grand Total | 19.49 | (Rupees Nineteen Crores and Forty Nine 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 CriteriaAnalytical Contacts | |
---|---|
Rujuta Sadanand Zajam Ratings Analyst rujuta.sz@brickworkratings.com |
Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@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 | State Bank Of India (SBI) | Cash CreditSanctioned | 15.00 | _ | 15.00 | |
2 | State Bank Of India (SBI) | GECLSanctioned | 2.99 | _ | 2.99 | |
3 | State Bank Of India (SBI) | GECLSanctioned | 1.50 | _ | 1.50 | |
Total | 19.49 | 0.00 | 19.49 | |||
TOTAL (Rupees Nineteen Crores and Forty Nine lakhs Only) |
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