Kathuria Roll Mill Pvt. Ltd.

Brickwork Ratings upgrades the long-term and short-term ratings and removes the ratings from ISSUER NOT COOPERATING* category for the Bank Loan Facilities of Rs. 48.38 Crs. of Kathuria Roll Mill Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (30 Apr 2024)	Present
Fund Based	26.50	33.38	Long Term	BWR B+/Stable Continues to be in ISSUER NOT COOPERATING* category/Downgraded	BWR BB + /Stable Upgrade and Removed from the ISSUER NOT COOPERATING* category
Non Fund Based	10.00	15.00	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR A4 + Upgrade and Removed from the ISSUER NOT COOPERATING* category
	(0.00)	(1.03)
	(0.00)	(15.00)
Grand Total	36.50	48.38	(Rupees Forty Eight Crores and Thirty Eight 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 has upgraded the long-term and short-term ratings to "BWR BB+/Stable" and "BWR A4+" from "BWR B+/Stable" and "BWR A4" for the bank loan facilities of Kathuria Roll Mill Pvt. Ltd.   

The Rating has factored, inter alia, the experienced management, moderate financial risk profile, Diversified product portfolio and location advantage of the company. However, the rating is constrained by the competitive nature of the industry, volatile raw material prices and working capital intensive operations of the company. Going forward, the ability of the company to improve its financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Kathuria Roll Mill 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 revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Established track record and extensive industry experience of the promoters :

  The company was incorporated in 1980 and has an operational track record of over four decades. The extensive experience of the promoters in the chemical industry and their understanding of the dynamics of the industry are expected to continue to support the business risk profile. 
   

• Moderate Financial profile :

  The company has demonstrated a robust growth trajectory in total operating income, rising from Rs. 69.66cr in FY22 to Rs. 95.86cr in FY23 and Rs. 117.24cr in FY 24. company has strong market presence and increasing demand for its products domestic and foreign market. PAT has increased from 1.05cr in FY22 to 1.61cr in FY23 and an increase of 1.67cr in FY24, the company has maintained a stable net profit through efficient management of operating expenses. The tangible net worth of the company stood at 32.87cr in FY24. increasing trend observed YOY due to retention of profits. The TOL/TNW improved to 2.95x in FY24 from 3.06x in FY 23. DSCR of the company stands at 1.21 times in FY23, 1.24 times in FY24. ISCR stands at 2.47 times in FY23, 2.45 times in FY24. The stability and growth in the ISCR and DSCR shows the strength and ability of the company to repay their financial obligations. 

• Diversified Product Portfolio and location advantage :

  The company manufactures rolling mill machineries which are tailor-made and diversified. The company offers rolling mill equipment, project engineering, process engineering, designing, erection and commissioning services. The product list includes: varied types of rolling mill stands, gear boxes, rake type cooling beds, conveyor tables, shears, power transmission couplings & shafts, coilers, high speed flywheels, layer transfer, shuffle bar mechanism, raw material handling system, cold bar shear clutch and brake type, etc. However, these manufacturing plants located in Ghaziabad have a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.

Credit Risks:

• High competition :

  The industry is highly competitive with a large number of organised and unorganised players which limits the bargaining power of the company and places pressure on profitability. Performance of the company will remain susceptible to competition from imports. High level of inventories are maintained as products are required to be supplied at short notice.
   

• Volatility in raw material prices :

  Rolling mills primarily rely on specific raw materials such as iron and steel wires, steel billets, scrap metal and alloys etc. Raw material cost is a major contributor to total operating cost, thereby making profitability sensitive to raw material prices primarily due to the fact that the major raw material is commodity in nature and witnesses frequent price fluctuations. The prices of these raw materials are highly volatile influenced by global market dynamics and demand fluctuations. Thus, any adverse change in the prices of the raw
  material may affect the profitability margins of the company.

• Working Capital Intensive Operations :

  The operations of the company are working capital intensive in nature. The conversion cycle of the company stood elongated as marked by 207 days for FY24. The company is required to maintain adequate inventory of raw material for smooth production process as well as maintain inventory of finished goods to meet demand of its customers which resulted in average inventory period of 245 days for FY24 as compared to 263 days in FY23. Furthermore, the company offers a credit period of around one and half months to its customers owing to its presence in a highly competitive industry resulting in average collection period of 52 days for FY24 as compared to 73 days in FY23. 

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of KRMPL. 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 financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive: Rating may be upgraded in case of substantial improvement in revenues, profit and debt service coverage ratios of the company or on account of any other favorable factors.

Negative: Rating may be downgraded in case there is deterioration in the financial profile of the company including the liquidity or on account of any unforeseen unfavorable events.

LIQUIDITY INDICATORS - Adequate

The company has cash and bank balance of 2.82 Cr in FY2024. The current ratio of the company stands at 1.27 times in FY2024. The company's average utilisation of cash credit is 80.98% during the last nine months. The current portion of long term debt is 3.71 Cr and the net cash accruals is 4.92 Cr in FY2025. Conversion cycle improved to 207 Days in FY2024. ISCR of the company stands at 2.45 times in FY2024. The DSCR of the company stands at 1.24 times in FY2024. The Company has no group companies. Taking all the above points into consideration the company's liquidity position is defined as adequate.

ABOUT THE ENTITY

Kathuria Roll Mill Pvt. Ltd. (KRMPL) , Delhi based Company was started in the year 1980 by late Mr. O. P. Kathuria as a partnership firm which was incorporated as a private limited Company in Sep’ 1999. The company is engaged in the manufacturing of rolling mill machinery and its spare parts and accessories. The manufacturing facility of the company is located at Ghaziabad, Uttar Pradesh. It also executes turnkey projects for setting up of rolling mills. The company provides consultancy, designing & engineering services for industrial rolling mills plants under its turnkey solutions. KRMPL is an ISO 9001:2015 certified Company and is also exporting the manufactured machinery to various countries mainly, Kenya, Bangladesh, Nepal, Ethiopia, U.A.E., Indonesia, Nigeria, Sri Lanka, Zambia, Yemen, Pakistan etc. The company is currently managed and controlled by the directors - Mr. Naresh Kathuria (MD), Mr. Umesh Kathuria, Mr. Kamal Kathuria and Mr. Rajesh Kathuria.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited - Annual)	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)
Operating Revenue	Rs.Crs.	69.66	95.86	117.24
EBITDA	Rs.Crs.	6.23	8.15	8.12
PAT	Rs.Crs.	1.05	1.61	1.67
Tangible Net Worth	Rs.Crs.	29.59	31.20	32.87
Total Debt / Tangible Net Worth	Times	1.04	1.18	1.28
Current Ratio	Times	1.22	1.37	1.27

KEY COVENANTS OF THE FACILITY RATED

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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Acuite ratings had reaffirmed & withdrawn its long term rating to ‘ACUITE B+' and the short term rating to ‘ACUITE A4’ on the Rs 30.52 crore bank facilities of Kathuria RollMill Private Limited.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2024)			2024 (History)		2023		2022		2021
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	33.38	BWR BB+/Stable (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	30Apr2024	BWR B+Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	20Feb2023	BWR BB-Stable (ISSUER NOT COOPERATING* /Downgrade)	NA	NA	16Dec2021	BWR BBStable (Downgrade/ISSUER NOT COOPERATING*)
Non Fund Based	ST	15.00	BWR A4+ (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	30Apr2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	20Feb2023	BWR A4 (ISSUER NOT COOPERATING* /Reaffirmation)	NA	NA	16Dec2021	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)
NFB SubLimit	ST	(1.03)	BWR A4+ (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	NA	NA	NA	NA	NA	NA	NA	NA
		(15.00)	BWR A4+ (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	NA	NA	NA	NA	NA	NA	NA	NA
Grand Total		48.38	(Rupees Forty Eight Crores and Thirty Eight lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Harish R Ratings Analyst harish.r@brickworkratings.com	V Ramachandra Director - Ratings ramachandra.v@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.)	Complexity of the Instrument
1	Bank of Baroda	Term Loan - Out-standing	_	_	0.00	Simple##
2	Bank of Baroda	Term Loan - Out-standing	_	_	0.00	Simple##
3	Bank of Baroda	Term Loan - Sanctioned	3.30	_	3.30	Simple##
4	Bank of Baroda	Term Loan - Sanctioned	1.90	_	1.90	Simple##
5	Bank of Baroda	Term Loan - Out-standing	0.42	_	0.42	Simple##
6	Bank of Baroda	Term Loan - Out-standing	0.40	_	0.40	Simple##
7	Bank of Baroda	Term Loan - Out-standing	0.54	_	0.54	Simple##
8	Bank of Baroda	Cash Credit - Sanctioned	14.00	_	14.00	Simple##
	Sub-Limit (Forward Cover Exposure Limit) - Sanctioned		(1.03)
9	Bank of Baroda	Bank Guarantee - Sanctioned	_	15.00	15.00	Simple##
	Sub-Limit (ILC/FLC LC) - Sanctioned		(15.00)
10	Bank of Baroda	Covid -19 Emergency Line Credit - Sanctioned	_	_	0.00	Simple##
11	Bank of Baroda	PC/PCFC/FDB/BRD/FBE - Sanctioned	11.00	_	11.00	Simple##
12	Bank of Baroda	GECL - Out-standing	0.52	_	0.52	Simple##
13	Bank of Baroda	GECL 1.0 - Out-standing	1.30	_	1.30	Simple##
Total			33.38	15.00	48.38
TOTAL (Rupees Forty Eight Crores and Thirty Eight 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.