RATING RATIONALE

20Mar2026

Lucky Steel Industries (SBD)

Brickwork Ratings upgrades the long-term ratings to BWR B+/Stable, reaffirms the short-term ratings at BWR A4 & simultaneously removes the ratings from the ISSUER NOT COOPERATING* Category for the Bank Loan Facilities of Rs. 60.00 Crs. of Lucky Steel Industries (SBD)

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (08 Jul 2025)	Present
Fund Based	(8.82)	(8.82)	Long Term	BWR C Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR B + /Stable Upgrade and Removed from the ISSUER NOT COOPERATING* category
Non Fund Based	60.00	60.00	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR A4 removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total	60.00	60.00	(Rupees Sixty Crores 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 rating of Lucky Steel Industries SBD to BWR B+/Stable, reaffirmed the short-term rating at A4, and simultaneously removed the ratings from the ISSUER NOT COOPERATING* Category for its bank loan facilities aggregating to Rs. 60.00 crore.

The rating is based on an assessment of the company’s audited financial statements for FY23, FY24, and FY25, along with the latest business performance data provided by the company.

The upgrade factors in the company’s strong promoter net worth and industry experience, comfortable capital structure, adequate liquidity buffer, and strategically optimal yard placement in Alang. However, the rating remains constrained by the cyclical nature of the iron and steel industry, its impact on profitability, and the company’s exposure to regulatory and environmental risks.

Going forward, key rating sensitivities include the acquisition of a new ship for breaking, which is expected to enhance the scale of operations, along with any improvement in the financial risk profile.

The Stable outlook reflects Brickwork Ratings’ expectation that the company’s business risk profile will be maintained over the medium term, indicating a low likelihood of a rating change. The outlook may be revised to Positive in case of sustained improvement in revenues and profitability margins, while it may be revised to Negative if there is a deterioration in the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

Comfortable capital structure and liquidity :
The entity has low leverage (Total Debt/TNW ~0.07x in FY25) with moderate cash balances and largely unutilised working capital limits, providing financial flexibility.
Optimal yard placement in Alang :
The company’s operations are strategically located within the Alang ship recycling yard, providing a significant advantage through direct access to a large and immediate market comprising numerous re-rolling mills and steel profile cutters in the region. Alang, which handles nearly 90% of India’s ship-breaking activity and is recognized as the country’s largest ship-breaking cluster, ensures consistent demand for the company’s output. In addition to this strong market ecosystem, the company benefits from Alang’s distinct geographical features, such as a high tidal range, wide continental shelf, favorable slope, and mud-free coastline that create ideal conditions for beaching a wide variety of ships during high tide. These factors together enhance the company’s operational efficiency and reinforce its competitive positioning in the ship-breaking industry.
Promoters’ industry experience :
The partners have experience in the ship-recycling ecosystem at Alang, supporting procurement of vessels and relationships with scrap traders and buyers.

Credit Risks:

Risk of withdrawal of the capital :
The Firm carries the risk of withdrawal of the capital being a partnership nature of constitution. In FY25, the partners withdrew capital of Rs. 2.04 Crs. But the firm is still backed by the partners' capital of Rs. 20.18 and USL of Rs. 1.38 Cr. Hence, the partners have supported the firm financially as and when required.
Exposure to risks related to inherent cyclicality, forex rates & volatile steel prices :
The shipbreaking industry is cyclical. The firm has to compete with other players for better deals among limited availability of vessels. Domestic players also face competition from shipbreakers in China, Bangladesh, and Pakistan. Exposure to fluctuations in forex rates persists because ships are imported and forex position remains uncovered for a long duration due to open LCs. Government policies, such as pollution control norms and duties structure, also affect the segment. The profitability is also exposed to volatile steel prices.
Exposure to regulatory and environmental 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

Standalone - For arriving at its ratings, BWR has considered the standalone performance of Lucky Steel Industries (SBD). BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive:

Acquisition of a new ship for breaking, leading to an increase in the scale of operations, along with an overall improvement in the financial risk profile of the firm supported by sustained growth in revenue and profitability in line with the projected levels by 105%, would be positive for the ratings.

Negative:

Any absence of operations in the core ship-breaking business, or any losses and/or deterioration in the firm’s financial risk profile that adversely impacts its profitability and capital structure, could exert downward pressure on the ratings.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterised by a sufficient cushion in accruals vis-a-vis nil repayment obligations and a moderate cash balance of Rs. 3.48 crore. Its bank limits are utilised to the extent of 0% and has unutilized LC limits with the bank, supported by the above unity current ratio, which stood at 84.38x. Considering all these factors, the liquidity position is assessed as "Adequate"

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Industrials	Capital Goods	Industrial Manufacturing	Ship Building & Allied Services

Lucky Steel Industries (SBD) was established by Mr. Asfaqhusen S. Masani in 1995 as a proprietorship concern; later, it converted into a partnership firm on 2nd February 2021. The firm's management changed, and the operation was taken over by father-son Mr. Arif Masani and Mr. Asharraza Arif Masani as new partners. The firm is having with its registered office in Bhavnagar and carrying out ship breaking business since past years at the Gujarat Marine Board (GMB) plot. The firm is engaged in the business of ship-breaking and ship recycling activity through an allotted plot at Alang Shipyard by the Gujarat Maritime Board (GMB). The firm purchases ships directly from ship owners or through sales agents for recycling them. Items like electrical equipment, machine parts, etc., are sold directly to end users. While scrap is sold in the market to scrap traders and manufacturing units, who use the scrap to produce steel.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)
Operating Revenue	Rs.Crs.	13.95	13.69	19.80
EBITDA	Rs.Crs.	0.25	0.06	0.33
PAT	Rs.Crs.	0.10	0.14	0.14
Tangible Net Worth	Rs.Crs.	19.15	20.18	18.60
Total Debt / Tangible Net Worth	Times	0.09	0.07	0.07
Current Ratio	Times	10.55	1.77	84.38

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

Creadit Rating Agency Status and Reason for Non-Cooparation Date of Press Release
ICRA ICRA reaffirmed the company’s long-term rating at B+/Stable and short-term rating at A4,with the ratings continuing to remain under the Issuer Not Cooperating (INC) category. 14Nov2025
CARE CARE Ratings downgraded the long-term rating to CARE B+/Stable while reaffirming the short-term rating at A4, and the ratings continue to remain under the Issuer Not Cooperating (INC) category 05Mar2026

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
ICRA	ICRA reaffirmed the company’s long-term rating at B+/Stable and short-term rating at A4,with the ratings continuing to remain under the Issuer Not Cooperating (INC) category.	14Nov2025
CARE	CARE Ratings downgraded the long-term rating to CARE B+/Stable while reaffirming the short-term rating at A4, and the ratings continue to remain under the Issuer Not Cooperating (INC) category	05Mar2026

ANY OTHER INFORMATION

No Other Information.

RATING HISTORY FOR THE PREVIOUS 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
FB SubLimit	LT	(8.82)	BWR B+/Stable (Upgrade and Removed from the ISSUER NOT COOPERATING* category)	08Jul2025	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	02Jul2024	BWR C (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	12Apr2023	BWR B- Stable (ISSUER NOT COOPERATING* /Downgrade)
Non Fund Based	ST	60.00	BWR A4 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	08Jul2025	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	02Jul2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	12Apr2023	BWR A4 (ISSUER NOT COOPERATING* /Reaffirmation)
Grand Total		60.00	(Rupees Sixty Crores Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Mukul Singh Sahu Ratings Analyst mukulsingh.s@brickworkratings.com	Ravi Rashmi Dhar Director - Ratings ravi.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Lucky Steel Industries (SBD)

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.)	Complexity of the Instrument
1	State Bank Of India (SBI)	Letter of Credit - Sanctioned	_	52.00	52.00	Simple##
	Sub-Limit (Cash Credit) - Sanctioned	(8.82)
2	State Bank Of India (SBI)	Credit Exposure Limit (CEL) - Sanctioned	_	1.20	1.20	Simple##
3	State Bank Of India (SBI)	Standby line of Credit (SLC) - Sanctioned	_	6.80	6.80	Simple##
Total			0.00	60.00	60.00
TOTAL (Rupees Sixty 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.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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