Rating Rationale

Brickwork Ratings has assigned the long-term rating and short-term rating of BWR BBB- (Stable) and BWR A3 for the bank loan facilities of Rs. 100.00 Crore of Shri Raghuvir Steel Private Limited (SRSPL).

For assigning the ratings, BWR has relied on the audited financials of the company up to FY25, management-certified provisional financials for FY26, projected financials for FY27-FY28, clarification provided by the company, and publicly available information.

Brickwork Ratings (BWR) has assigned the ratings of Shri Raghuvir Steel Private Limited (SRSPL), considering factors such as the experienced management and Promoter support, Integrated Operational Setup and Proprietary Product Patent, Diversified Revenue and Dual-Channel Distribution Framework, and Comfortable Financial Risk Profile of Shri Raghuvir Steel Private Limited (SRSPL). The ratings are, however, constrained by the company’s Fragmented Market Structure and Exposure to Intense Pricing Pressure, Macro-Economic and Sectoral Cyclicality and Susceptibility to Raw Material Price Volatility and Input Risks.

The rating outlook is "Stable," reflecting BWR's expectation that  Shri Raghuvir Steel Private Limited (SRSPL) will sustain its business risk profile over the medium term. This outlook suggests a minimal probability of rating revision within the foreseeable future. An Upward revision to "Positive" may be considered should revenue and profitability demonstrate sustained growth, while a "Negative" revision could be triggered by a deterioration in the financial risk profile.

The terms of sanction of the rated facilities include standard covenants normally stipulated for such facilities.

• Experienced Management and Promoter support :

  The Company is spearheaded by a five-member board of first-generation entrepreneurs with nearly two decades of collective experience in the Saurashtra steel cluster. Operational responsibilities are well-defined across key functional verticals, mitigating key-man risk and supporting operational efficiency.
  Promoters have consistently demonstrated capital support by infusing Rs. 18.10 crore in subordinated unsecured loans (projected to increase to Rs. 27.75 crore) to bolster the capital structure. Further reinforcing capital support, the promoters have committed a 25% quasi-equity contribution (Rs. 11.90 crore) toward the Rs. 47.42 crore captive solar power project (9 MW), of which Rs. 3.12 crore has already been infused ahead of initial debt drawdown.

• Integrated Operational Setup and Proprietary Product Patent :

  Shri Raghuvir Steel Private Limited’s (SRSPL) strategic combination of proprietary product differentiation and efficient, single-site backward integration. Holding IP protection over its "RS Virla TMT" brand moves the company out of generic commodity re-bar pricing, securing premium realisations, strong channel loyalty, and higher switching costs for institutional buyers.

  This commercial advantage is sustained by an integrated plant where in-house billet casting and direct hot-charging bypass the reheating phase, substantially cutting fuel costs, minimizing scale loss, and insulating the company from merchant billet price volatility. Coupled with German Thermex quenching technology that delivers mechanical strength up to 32% above IS 1786 standards and a transition to a two-shift model in August 2026 to boost throughput, SRSPL maintains low conversion costs while capturing top-tier realisations. Together, these drivers generate resilient operating cash flows that strongly reinforce overall debt servicing capability and credit quality.

• Diversified Revenue and Dual-Channel Distribution Framework :

  SRSPL operates a multi-stream revenue model spanning finished TMT re-bars, intermediate merchant billets, and fully monetized manufacturing by-products. While TMT re-bars constitute the core revenue driver (76.2% of total product sales in FY2026), merchant billet sales generate a distinct second revenue stream (Rs. 24.22 crore in FY2026), giving management operational flexibility to sell excess melt directly whenever intermediate billet margins outweigh re-rolling spreads. 
  SRSPL prioritizes the commercial expansion of its proprietary brand, "RS Virla TMT", which generated Rs. 96.92 crore in FY2026. Finished TMT sales are structured across two complementary sales channels that optimize both scale and profit margins. Balances high-volume contract manufacturing for Shri Bajrang Power and Ispat Limited ("Goel TMT") (Rs. 87.58 crore in FY2026) 

• Financial Risk Profile :

  Shri Raghuvir Steel Pvt. Ltd. (SRSPL) maintains a Comfortable financial risk profile, supported by robust revenue growth and promoter support. Total Operating Income (TOI) grew 29.78% year-on-year to Rs. 240.80 Cr in FY26 (Provisional) due to higher sales volumes and capacity utilization. Promoters infused Rs. 18.10 Cr in subordinated unsecured loans, raising Adjusted Tangible Net Worth (TNW) to Rs. 33.50 Cr. Driven by this quasi-equity treatment, Adjusted Total Debt to TNW improved from 1.75x in FY25 to 1.48x in FY26 (Provisional), while Adjusted Total Outside Liabilities (TOL) to TNW moderated from 3.59x to 2.24x. Cost control and operational efficiencies lifted Profit After Tax (PAT) to Rs. 2.76 Cr, strengthening debt coverage with an ISCR of 1.84x and DSCR of 1.11x. Overall, SRSPL demonstrates a balanced capital structure, lower reliance on trade credit, and adequate liquidity headroom to meet ongoing obligations.

• Fragmented Market Structure & Exposure to Intense Pricing Pressure :

  SRSPL operates in the highly competitive and fragmented secondary steel sector alongside numerous unorganized re-rollers and regional secondary mills. Because TMT bars and steel billets are standardized commodities, secondary producers possess limited pricing power and remain vulnerable to price undercutting. Furthermore, secondary steel mills face margin compression when integrated primary producers, who benefit from economies of scale and captive iron ore mines, adjust market prices downward.

• Macro-Economic and Sectoral Cyclicality :

  Demand for secondary long steel products is highly cyclical and intrinsically linked to broader construction activity, infrastructure development, and private real estate investment. Economic slowdowns, elevated borrowing costs, or delays in government infrastructure disbursements directly depress demand volumes and squeeze product realization spreads.

  The secondary steel market experiences pronounced seasonality, with peak sales concentrated in the fourth quarter. Conversely, the monsoon season causes widespread slowdowns in civil construction and infrastructure projects across India. This seasonal lull leads to temporary inventory accumulation, lower mill throughput, and temporary liquidity absorption as working capital cycles elongate.

• Susceptibility to Raw Material Price Volatility and Input Risks :

  SRSPL’s cost structure and conversion margins are highly sensitive to price fluctuations in key raw materials, primarily industrial ferrous scrap, sponge iron, and pig iron. Industrial scrap prices are inherently volatile, reacting sharply to regional manufacturing output, international scrap trade flows, and demand cycles in secondary steelmaking. While in-house billet manufacturing insulates the Company from intermediate market spreads, it leaves operating margins directly exposed to swings in scrap procurement costs. Furthermore, localized economic slowdowns in Rajkot's industrial cluster could restrict regional scrap availability, forcing SRSPL to source inputs from distant suppliers at higher freight costs.

Positive Triggers:

• A significant improvement in the scale of operations TOI above Rs.340 Cr, operating margins of over 5.70%, and net margin of over 2.15% on a sustained basis.
• Improvement in the financial risk profile.

Negative Triggers:

• Any increase in leverage, with Adjusted TOL/TNW deteriorating above 2.5x.
• Significant decline in revenue, with operating margins dropping below 3.70% and profit margin below 1.10%.

The company maintains an adequate liquidity position, supported by steady operational cash flow generation and continuous promoter backing, as well as expected gross cash accruals (GCA) of Rs. 5.36 crore in FY26 (Provisional) and unencumbered cash and bank balances of Rs. 2.05 crore. However, high bank limit utilization reflects limited cushion; average cash credit (CC) utilization stood at more than 90% over the 12 months ending August 2026 (partially elevated due to a 3-month ad hoc limit), while non-fund-based (bank guarantee) limit utilization averaged 84.40%. The current ratio moderated from 1.04x in FY25 to 0.93x in FY26 (Prov.). Liquidity is further backed by promoter support via Rs. 18.10 crore in subordinated unsecured loans.

Shri Raghuvir Steel Private Limited (SRSPL) presents a favorable Environmental, Social, and Governance (ESG) profile relative to industry standards, underpinned by third-party management certifications and a recycling-centered operational model.

Environmental

• Recycling & Low Carbon Intensity: Uses mild steel (MS) scrap (37,436 MT consumed in FY2026) via the electric-furnace route, reducing carbon emissions and eliminating the need for coking coal or iron ore.
• Process & Energy Efficiency: Direct hot charging removes fossil fuel-based billet reheating. A planned 9 MW captive solar plant will generate ~150 lakh units annually from FY2027 to lower Scope 2 emissions.
• Material Recovery & Certifications: ISO 14001:2015 certified; process residues (end cuts, mill scale) generated ₹10.44 crore in FY2026 through monetization and re-entry into the supply chain.

Social

• Safety & Workplace: ISO 45001:2018 certified for occupational health and safety. Total workforce expanded to 107 in FY2026, with a majority permanent staff base (58%).
• Product Safety & Regional Impact: Produces high-ductility seismic-resistant TMT grades (Fe 500D, Fe 550D) exceeding BIS standards. Supports the local economy in the Rajkot/Saurashtra industrial cluster through regional scrap sourcing and ancillary employment.

Governance

• Quality & Compliance: ISO 9001:2015 certified with dual BIS product licenses (IS 1786:2008 and IS 2830:2012) and a revision-controlled Quality Assurance Plan.
• Audit, Ownership & Traceability: Audited independently by D K Kalyani & Associates. Ownership is entirely held by 11 promoter-family members actively involved in management. Maintains unique tag-based bundle traceability and direct reporting to lenders.

Shri Raghuvir Steel Private Limited (SRSPL) is a Rajkot, Gujarat-based steel manufacturer specializing in mild steel (MS) billets and thermo-mechanically treated (TMT) re-bars, marketed under its flagship brand "RS Virla TMT". The company operates an integrated manufacturing unit in Kuvadva, Rajkot, with installed annual capacities of 61,000 MT for billets and 96,000 MT for TMT bars. SRSPL operates a dual-channel commercial model, offering its proprietary TMT re-bar range while also undertaking white-label contract manufacturing for established industry partners.

The company holds independent Bureau of Indian Standards (BIS) product certification licences under IS 1786:2008 and IS 2830:2012, alongside ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 management system certifications.

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