RATING RATIONALE
06Jan2023

Rama Steel Tubes Ltd.

Brickwork Ratings downgrades and simultaneously withdraws the ratings for the Bank Loan Facilities of Rs.131.75Crs. of Rama Steel Tubes Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(17 Dec 2021)
Present
Fund Based 81.75 81.75 Long Term BWR BBB/Stable
Upgrade
BWR BBB - /Stable
Downgrade/Withdrawal
Non Fund Based 50.00 50.00 Short Term BWR A3+
Upgrade
BWR A3
Downgrade/Withdrawal
Grand Total 131.75 131.75 (Rupees One Hundred Thirty One Crores and Seventy Five lakhs 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 (BWR) has downgraded the long term and short term ratings of the bank loan facilities aggregating Rs.131.75Crs of Rama Steel Tubes Ltd. (or the Company), to BWR BBB-/Stable and BWR A3, and has simultaneously withdrawn the same with immediate effect. The withdrawal of the rating is based on the company’s request for withdrawal vide letter dated 21 December, 2022 and submission of No Objection Certificates (NOC) from all its lenders. The withdrawal of ratings is in line with BWR's policy on the withdrawal of its ratings on bank loan facilities, and the relevant documents are held on record. 

The downgrade in ratings factors in decline in profitability, moderation in debt coverage indicators during H1 FY23 and and limited available information for review at the time of withdrawal of ratings. The operating and net profit of the company have declined to Rs.13.98Crs and Rs.9.36Crs respectively during H1 FY23 against Rs.16.49Crs and Rs.14.19Crs respectively during the same period last FY.

 

ABOUT THE ENTITY

Rama Steel Tubes Ltd (RSTL) was incorporated in 1974 by the late Shri. Harbans Lal Bansal and is currently managed by his son Mr. Naresh Kumar Bansal and grandson Mr. Richi Bansal. The company started its commercial operations in 1981 with an installed capacity of 10,000 metric tonnes per annum (MTPA) for the manufacturing of ERW steel tubes/ pipes in Sahibabad. It is engaged in manufacturing of Black Pipes and Tubes, Galvanised pipes and tubes and poles. It is also involved in trading of steel pipes through its subsidiary RST International Trading FZE. The company has a total production capacity of 2,28,000 MTPA. It has three manufacturing facilities at Sahibabad, UP with installed capacity of 60,000 MTPA, Khopoli, Maharashtra with installed capacity of 1,32,000 MTPA and Anantapur, Andhra Pradesh with installed capacity of 36,000 MTPA. The company products find application in various industries such as real estate, defence, telecom, irrigation and infrastructure. It is listed on BSE and NSE. The promoter group holds 65.40% equity stake in the company and the remaining is with the public, as on September 30, 2022.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

ANY OTHER INFORMATION

NA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2023) 2022 2021 2020
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 81.75
BWR BBB-/Stable
(Downgrade/Withdrawal)
NA
NA
17Dec2021
BWR BBBStable
(Upgrade)
17Nov2020
BWR BBB- Stable
(Assignment)
Non Fund Based ST 50.00
BWR A3
(Downgrade/Withdrawal)
NA
NA
17Dec2021
BWR A3+
(Upgrade)
17Nov2020
BWR A3
(Assignment)
Grand Total 131.75 (Rupees One Hundred Thirty One Crores and Seventy Five lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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

Akanksha

Senior Ratings Analyst akanksha@brickworkratings.com

Ravi Rashmi Dhar

ravi.d@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Rama Steel Tubes Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Axis Bank Ltd. Cash CreditSanctioned 20.00 _ 20.00
2 Axis Bank Ltd. Bank GuaranteeSanctioned _ 11.00 11.00
3 Axis Bank Ltd. Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 3.60 _ 3.60
4 Axis Bank Ltd. ILC/FLCSanctioned _ 14.00 14.00
5 Canara Bank ILC/FLCSanctioned _ 8.00 8.00
6 Canara Bank Term LoanSanctioned 4.33 _ 4.33
7 Canara Bank GECLSanctioned 2.99 _ 2.99
8 Canara Bank GECLSanctioned 1.50 _ 1.50
9 Canara Bank Bank GuaranteeSanctioned _ 7.00 7.00
10 Canara Bank Cash CreditSanctioned 15.00 _ 15.00
11 HDFC Bank Cash CreditSanctioned 25.00 _ 25.00
12 HDFC Bank Bank GuaranteeSanctioned _ 10.00 10.00
13 HDFC Bank GECLSanctioned 4.65 _ 4.65
14 Others GECLProposed 4.68 _ 4.68
Total 81.75 50.00 131.75
TOTAL (Rupees One Hundred Thirty One Crores and Seventy Five lakhs Only)
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