Sai Infinium Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 54.35 Crs. of Sai Infinium Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	54.35	Long Term	BWR BBB /Stable Assignment
Grand Total	54.35	(Rupees Fifty Four Crores and Thirty 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

BWR assigns the rating of BWR BBB/Stable for the bank loan facilities of Rs 54.35 Crs of Sai Infinium Ltd.

The credit rating outlook for Sai Infinium Limited is underpinned by its experienced management and successful diversification into steel re-rolling, leveraging its strategic location in the Alang ship recycling yard. Upcoming capacity expansion with a new mill operational by January 2026 is poised to significantly boost future production and revenue. The company has already demonstrated robust revenue growth, strengthening financials with improved profitability and gearing, and adequate liquidity.

However, the ratings are constrained by the inherent cyclical nature of both the ship recycling and steel industries. The ship recycling sector's volatility is directly tied to global freight rates, while steel is susceptible to price fluctuations, directly impacting operations. Additionally, the ship-breaking industry faces significant regulatory and environmental hazard risks, demanding rigorous adherence to safety and environmental standards due to the meticulous handling and disposal required for hazardous substances.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes 'Sai Infinium Ltd.. ' business risk profile will be maintained over the medium term. The outlook may be revised to Positive if a sustained increase in the scale of operations and higher than envisaged profitability result in an improved financial risk profile and better gearing and debt protection metrics. The outlook may be revised to Negative if lower than expected revenue or profitability, a stretch in the working capital cycle, unanticipated capex or weakening gearing impact the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

• Optimal yard placement in Alang :

  The company is strategically positioned within the Alang ship recycling yard, a critical advantage given the immediate and substantial market provided by the numerous re-rolling mills and steel profile cutters already operating there. This integration into Alang, which accounts for nearly 90% of India's ship-breaking activities and stands as the nation's largest ship-breaking cluster, ensures a consistent demand for its products. Beyond this formidable market presence, the company also benefits immensely from Alang's unique geographical attributes. Features like a high tidal range, a wide continental shelf, an adequate slope, and a mud-free coast create optimal conditions for the efficient beaching of diverse ship types during high tide, further solidifying the company's operational efficiency and competitive edge within this specialized industry.

   

• Proven Leadership & Operational History :

  Since its establishment in 2004, the company has been expertly guided by a highly experienced team of promoters. Mr. Nikhil Gupta, Mr. Munish Bansal, Mr. Sandeep Kothari, Mr. Shivnarayan Bansal, and Mrs. Ishu Bansal collectively bring between 10 to 15 years of invaluable industry experience, providing robust leadership and strategic direction. Their profound understanding of the sector, coupled with a proven track record, has been instrumental in the company's sustained success. Furthermore, their vision is seamlessly executed by a talented and skilled workforce, whose dedication ensures smooth and efficient operations. This combination of seasoned leadership and a proficient team has allowed the company to consistently navigate market dynamics and maintain operational excellence over the years.

• Conversion of the plot into a Green Recycling Yard :

  SAI Infinium Pvt. Ltd. holds a Statement of Compliance from Nippon Kaiji Kyokai (ClassNK). This certification confirms that their ship recycling facility in Alang, India, operates in strict adherence to the IMO Resolution MEPC.210(63) "2012 GUIDELINES FOR SAFE AND ENVIRONMENTALLY SOUND SHIP RECYCLING". Originally issued on March 15, 2021, and rewritten on January 26, 2023, due to a name change, this compliance statement is valid until March 14, 2026. The continued validity is subject to ongoing compliance and successful periodical audits, with recent annual and intermediate audits conducted on January 22, 2024. This demonstrates SAI Infinium's commitment to maintaining high standards in safe and environmentally responsible ship recycling practices

• Healthy growth in the scale of operations :

  Sai Infinium Limited (SIL) experienced a significant increase in total operating income, rising from Rs. 148.74 crore in Fiscal Year 2022 to Rs. 508.11 crore in Fiscal Year 2023. This substantial growth was primarily driven by the commencement of operations at the rolling mill for TMX/TMT bars in January 2022. However, SIL's total operating income saw a decline in Fiscal Year 2024, decreasing to Rs. 451.75 crore, mainly attributed to lower per-unit realization. 

Credit Risks:

• Cyclical Risks in Ship Recycling & Steel :

  The ship recycling industry inherently faces cyclical fluctuations, primarily driven by the inverse relationship between the supply of older vessels for dismantling and prevailing global freight rates. These freight rates are themselves a reflection of the intricate balance between worldwide demand for seaborne transport and the availability of new shipbuilding capacity, both of which are significantly influenced by global merchandise trade volumes. During periods of economic recession and depressed freight rates, it becomes economically more viable for shipowners to recycle older vessels rather than continue their operation, leading to an increased supply of ships for breaking. Consequently, Sai Infinium Ltd.'s operational landscape is directly impacted by these dynamics. Furthermore, as the company's activities are intrinsically linked to the steel industry, its financial performance is also susceptible to the inherent cyclicality and price volatility characteristic of the steel sector. This dual exposure to the cyclical nature of both ship breaking and steel production necessitates a strategic approach to mitigate potential market fluctuations

• Exposure to regulatory and environment hazard risk :

  The ship-breaking industry, particularly within Gujarat's Alang-Sosiya belt, operates under a stringent regulatory framework, mandating rigorous adherence to both working and safety standards for its labor force, alongside comprehensive environmental compliance. This highly regulated environment necessitates significant investment and continuous oversight from ship-breakers to ensure the well-being of their employees and minimize ecological impact. Despite these stringent measures, the industry remains inherently susceptible to pollution risks. The dismantling process inherently involves hazardous substances, including but not limited to lead, asbestos, various acids, and hazardous paints. The presence of these materials demands meticulous handling and disposal protocols to prevent environmental contamination and safeguard public health, underscoring the ongoing challenges and responsibilities associated with managing such complex industrial operations.

ANALYTICAL APPROACH - Standalone

To arrive at its ratings, BWR has considered a standalone approach. Reference may be made to the Rating Criteria hyperlinked below.

RATING SENSITIVITIES

Going forward, the company's ability to expand its operational scale, boost profitability, enhance liquidity and credit profile, and effectively manage the working capital will be critical factors influencing its ratings.

Positive factors:-

• Sustained scaling up of operations, with Total Operating Income (TOI) consistently exceeding Rs. 400 crore, driven by core ship recycling and manufacturing activities, accompanied by a sustained improvement in profitability margin above 3%.
• Maintenance of consistent gearing levels below 1.5x.
• Continued sustenance of the capital structure and further improvement in debt protection metrics.

Negative factors:-

• Any decline in the scale of operations by 25% or more, and/or a sustained deterioration in profitability, leading to impaired liquidity and/or debt protection metrics.
• Deterioration in working capital management that adversely impacts the company's liquidity position.
• Any variance exceeding 5% in the final audited figures for FY 25, compared to the provisional figures.

LIQUIDITY INDICATORS - Adequate

The company exhibits adequate liquidity, underpinned by net cash accruals of Rs 24.30 Crores, which comfortably service its debt. Healthy debt protection metrics were maintained in FY24, with a DSCR of 3.17x and an ISCR of 3.64x. Working capital is efficiently managed, reflected by an average utilization of approximately 65% of sanctioned limits and an optimal current ratio of 1.57x during FY24. Furthermore, the company has maintained provisions for unforeseen capital expenditures, and combined with an unutilized working capital buffer and the management's capacity to infuse additional capital, these factors position the company with a robust and healthy liquidity profile.

ABOUT THE ENTITY

Established in 2004 and formerly known as Sai Bandhan Infinium Limited, Sai Infinium Limited is a private limited company based in Bhavnagar, Gujarat, India. Initially focused on ship dismantling for approximately one and a half decades, the company has since diversified its operations. Sai Infinium Limited has expanded into the manufacturing sector with the establishment of a steel re-rolling mill producing TMT bars under the brand name "Bandhan TMT Bars" and "Tejas TMT Bars". The company benefits from over four decades of management expertise in the ship dismantling industry, contributing to its established market reputation. The key directors of the company are Mr. Nikhil Gupta, Mr. Munish Bansal, Mr. Sandeep Kothari, Mr. Shivnarayan Bansal, and Mrs. Ishu Bansal.

KEY COVENANTS OF THE FACILITY RATED

The key covenants are the standard terms as stipulated in the sanction letters of the rated facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST 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	54.35	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		54.35	(Rupees Fifty Four Crores and Thirty Five lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Services Sector
• Manufacturing Company

Analytical Contacts
Varsha Jasmin Rating Analyst varsha.j@brickworkratings.com	Nagaraj K Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@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	Bank of India	Term Loan - Out-standing	24.88	_	24.88	Simple##
2	Bank of India	Term Loan - Out-standing	9.47	_	9.47	Simple##
3	Bank of India	Cash Credit - Sanctioned	20.00	_	20.00	Simple##
Total			54.35	0.00	54.35
TOTAL (Rupees Fifty Four Crores and Thirty Five 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.