RATING RATIONALE
10Apr2026
Jai Mangla Sponge Iron Pvt. Ltd.
Brickwork Ratings assigns the long-term ratings at BWR BBB-/Stable for the Bank Loan Facilities of Rs. 40.00 Crs. of Jai Mangla Sponge Iron Pvt. Ltd.
Particulars| Facilities** | Amount(Rs.Crs.) | Tenure | Rating# | |
|---|---|---|---|---|
| Fund Based | 40.00 | Long Term |
BWR BBB -
/Stable Assignment |
|
| Grand Total | 40.00 | (Rupees Forty Crores Only) | ||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK
Brickwork Ratings assigns the long-term ratings at BWR BBB- /Stable for the bank loan facilities aggregating to Rs.40.00 Crs of Jai Mangla Sponge Iron Pvt. Ltd.
The rating derives strength from the company’s experienced promoters, a comfortable capital structure marked by strong net worth and low leverage, adequate debt protection metrics, and an adequate liquidity profile supported by working capital management. The rating also factors in the company’s established operational track record and its strategic location advantage. However, the rating is constrained by the company’s modest profitability due to the commodity nature of operations, its presence in a highly competitive and cyclical steel industry, and significant inter-group transactions, including loans & advances and customer advances, indicating circular fund movement within group entities, which may impact the transparency of cash flows and the company’s standalone liquidity profile
The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes Jai Mangla Sponge Iron Pvt. Ltd.’s business and financial 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 leading to stronger cash accruals and improved leverage. The outlook may be revised to Negative if lower than expected revenue or profitability, deterioration in leverage indicators, or any stress in servicing debt obligations.
For assigning the rating, BWR has relied upon the last 3 years of audited financials till FY25 and projected financials for FY26 & FY27, and publicly available information and clarification provided by management.
KEY RATING DRIVERSCredit Strengths:
-
Experienced Management :
The company is managed by Mr. Mohit Kumar Poddar, Mr. Nitin Bhalotia, and Mr. Chandan Mittal, who collectively possess over 40 years of experience in the iron and steel industry. The directors have been actively involved in the company’s operations and have demonstrated the ability to maintain stable business performance and long-standing relationships with customers and suppliers. Their experience and understanding of industry dynamics provide comfort with respect to operational efficiency and decision-making.
Over the years, the management has developed established relationships with suppliers as well as customers, particularly with steel rolling mills and traders operating in various states such as West Bengal, Uttar Pradesh, Bihar and Jharkhand. These long-standing relationships support regular orders, repeat business and stable demand for MS billets, thereby providing operational stability to the company.
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Comfortable Capital Structure :
The company maintains a comfortable capital structure, supported by a strong net worth of Rs. 212.59 Cr as on FY25 and low overall gearing, with Total Debt to Tangible Net Worth at ~0.08x. The total debt remains low at around Rs. 16.35 Cr, indicating limited reliance on external borrowings. The improvement in capital structure is further supported by equity infusion and accretion to reserves, providing a strong cushion to absorb business risks and support future growth.
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Adequate Debt Protection Metrics :
The company has adequate debt protection metrics, with interest service coverage ratio (ISCR) at 2.66x and debt service coverage ratio (DSCR) at 1.66x in FY25, indicating sufficient ability to service its debt obligations. The coverage indicators are further supported by low debt levels and stable cash accruals, and are expected to improve in the projected period with increase in profitability.
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Modest Profitability :
The company’s profitability remains low, with EBITDA margin at ~2.48% and PAT margin at ~0.81% in FY25, due to the commodity nature of operations.
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Intense competition and inherent cyclicality in the steel industry :
The company is operating in a competitive and fragmented nature of industry specially in the steel-producing industry. There are several players who are engaged in the sponge iron manufacturing business in the organized and unorganized sectors. Moreover, the profit margins and sales of the company remain exposed to inherent cyclicality in the steel industry. Adverse volatility in steel prices will have an adverse effect on the company's performance in view of JMSPL's direct linkage to the fortunes of the Steel industry.
-
High Group Exposure and Inter-Company Transactions :
The company has significant exposure in loans and advances amounting to Rs. 165.00 Cr in FY25, which constitutes a substantial portion of its current assets, indicating deployment of funds outside core operations. The exposure includes advances extended to group entities, which raises concerns regarding fund utilization and liquidity management. Further, the company has also received advances from group companies amounting to Rs. 85.00 Cr in FY25, reflecting inter-group financial linkages and dependency within the group structure. The presence of both outflow (loans & advances) and inflow (group advances) indicates circular fund movement within group entities, which may impact transparency of cash flows and the company’s standalone liquidity profile.
For arriving at its ratings, BWR has considered the standalone performance of the company. 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 ability of the company to improve its scale of operations, profitability margins, overall credit risk profile and efficiently manage its working capital requirement would be the key rating sensitivity.
Positive Triggers:
- A significant improvement in the scale of operations TOI above Rs.500 Cr, operating margins of over 7.5% and net margin of over 3% on a sustained basis.
- Improvement in capital structure, with Adjusted TOL/TNW improving to below 1.0x on a sustained basis, reflecting strengthening of leverage profile.
Negative Triggers:
- The rating may be downgraded if there is further deterioration in the financial risk profile, a significant decline in revenue, with operating margins dropping below 2.5%
- Any increase in leverage, with Adjusted TOL/TNW deteriorating above 2.0x, indicating weakening of capital structure.
- Any significant exposure to group entities or recurrence of large loans and advances, impacting the standalone credit profile, will be a key Monitorable.
The company’s liquidity profile remains adequate, supported by moderate internal cash accruals. The net cash accrual for FY25 stood at about Rs.5.40 crore against CPLTD of around Rs.2.40 crore, indicating adequate coverage of scheduled repayments. The company is expected to generate cash accruals of around Rs.7.20 crore in FY26, which is sufficient to cover the projected CPLTD of about Rs.2.00 crore, reflecting satisfactory debt servicing capability. The current ratio remained moderate at 1.82 times in FY25. The average working capital utilisation is around 65.39%. Hence, additionally, it has a buffer available in cash credit, and therefore, the liquidity is assessed as adequate.
ABOUT THE ENTITY| Macro Economic Indicator | Sector | Industry | Basic Industry |
|---|---|---|---|
| Commodities | Metals & Mining | Ferrous Metals | Iron & Steel |
Jai Mangla Sponge Iron Private Limited (JMSIPL) was incorporated on May 16, 2000, and commenced its commercial operations in 2006. The company is currently managed by Mr. Mohit Kumar Poddar, Mr. Nitin Bhalotia, and Mr. Chandan Mittal, who have a cumulative experience in the iron and steel industry.
The registered office of the company is located in Patna, Bihar, while its manufacturing facility is situated in the Saraikela Kharswan district of Jharkhand, which provides proximity to key raw materials such as iron ore and coal.
JMSIPL is engaged in the manufacturing of sponge iron, a key raw material used in steel production. The company operates a sponge iron plant with an installed capacity of 60,000 metric tonnes per annum (MTPA).
In addition, the company also undertakes trading of coal and the sale of dust generated during the manufacturing process, thereby supporting its overall revenue.
The company benefits from its established operational track record and the experience of its management, supporting its presence in the regional sponge iron market.
ESG ProfileThe company demonstrates an evolving ESG profile based on its environmental, social, and governance practices.
Environmental: Environmental risks are inherent in the steel manufacturing industry due to high water usage, waste generation, and reliance on energy-intensive processes. However, the company has obtained necessary environmental clearances from the relevant authorities and adheres to prescribed environmental norms.
Social: Social factors hinge on adherence to labour laws, accident prevention frameworks, and human-capital development, with metrics such as workforce mix, safety performance , and training initiatives offering insights into operational resilience.
Governance: Governance assessment focuses on board independence, committee effectiveness, and robustness of compliance systems, supported by readily available disclosures on board structure, audit mechanisms, and risk-management practices.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 23 - 24 (Audited) |
FY 24 - 25 (Audited) |
FY 25 - 26 (Unaudited) |
|---|---|---|---|---|
| Operating Revenue | Rs.Crs. | 288.26 | 301.94 | 308.83 |
| EBITDA | Rs.Crs. | 7.07 | 7.49 | 11.08 |
| PAT | Rs.Crs. | 2.28 | 2.44 | 3.16 |
| Tangible Net Worth | Rs.Crs. | 162.38 | 212.59 | Not Available |
| Total Debt / Tangible Net Worth | Times | 0.27 | 0.08 | Not Available |
| Current Ratio | Times | 1.91 | 1.82 | Not Available |
The terms of sanction include standard covenants normally stipulated for such facilities.
STATUS OF NON-COOPERATION WITH PREVIOUS CRA
Not Applicable
RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2026) | 2025 | 2024 | 2023 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 40.00 |
BWR BBB-/Stable
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| Grand Total | 40.00 | (Rupees Forty Crores Only) | |||||||
| Analytical Contacts | |
|---|---|
|
Chinmaya R Rating Analyst chinmaya.r@brickworkratings.com |
Nitika Srivastava Associate Director Ratings nitika.s@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 | State Bank Of India (SBI) | Cash CreditSanctioned | 40.00 | _ | 40.00 | 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.
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars | Complexity of the Instrument |
|---|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| Nil | Nil | Nil | Nil |
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