RATING RATIONALE
19Jul2021

Shanti Gopal Concast Ltd.

Brickwork Ratings removes from the Issuer Non-Cooperating category and reaffirms the ratings for the Bank Loan Facilities of Rs. 65.72 Crs. of Shanti Gopal Concast Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(07 May 2021)
Present
Fund Based 39.06 44.83 Long Term BWR BBB- (Stable) (Issuer did not Cooperate. Based on the best available information)
Reaffirmation
BWR BBB - /Stable
Reaffirmation
Non Fund Based 20.89 20.89 Long Term BWR BBB- (Stable) (Issuer did not Cooperate. Based on the best available information)
Reaffirmation
BWR BBB - /Stable
Reaffirmation
Grand Total 59.95 65.72 (Rupees Sixty Five Crores and Seventy Two 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

Reaffirmation in the ratings of Shanti Gopal Concast Ltd. ( SGCL or ‘the company’) factors in growth in revenues, improvement in the production capacity utilisation, comfortable gearing and debt coverage metrics. Overall liquidity in the company is adequate with sufficient cash accruals to support debt obligations, comfortable NWC and cash balances.

Going forward, BWR expects revenues, production capacity utilisation and profit margins to improve along the projected lines. As the company has not proposed any debt funded capex or any other additional term debt facility, overall gearing is expected to improve with the maturity of existing term debt. Debt coverage DSCR and ISCR and overall liquidity in the company are expected to remain at moderate levels during FY22 and FY23.

The rating is, however, constrained by low profit margins, cyclicity in industry, volatility in input prices and customer concentration risks.

Outlook: Stable

BWR believes that Shanti Gopal Concast Ltd.'s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS


Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Upward :Substantial and sustainable improvement in scale of operations, operating margins, and debt coverage indicators would support upward rating action.

Downward: Decline in revenues, operating margins, debt coverage indicators and overall liquidity in the company would attract adverse rating action.

LIQUIDITY INDICATORS - Adequate

Liquidity in the company is adequate as indicated by cash accruals, debt coverage ratios, NWC and cash balances. During FY21, the company has generated cash accruals of Rs.7.40 crs against term debt obligations of Rs.5 crs. Debt coverage DSCR and interest coverage ISCR are comfortable at 1.21x and 1.90x respectively during FY21 (Prov.). NWC in the company has improved from Rs.20 crs in FY20 to Rs.57 crs in FY21 (Prov.) and is expected to remain at comfortable levels during FY22 and FY23. Cash and equivalents of Rs.12.32 crs in FY21 (Prov.) provide the liquidity buffer to the company to meet any mismatches. During FY21, promoters of the company have infused additional USL of Rs.25 crs and the company has availed 6M loan moratorium and COVID emergency funding of Rs.10.15 crs to meet liquidity mismatches during COVID 19 disruptions. USL of Rs.25 crs are proposed to be retained in the business at least during FY22 and FY23. The company has proposed to enhance the WC limits from current Rs.25 crs to Rs.35 crs to meet growing WC requirements on account of increase in overall scale in operations. Going forward, the company is expected to generate adequate cash accruals to meet regular term debt obligations. UPFC loans of Rs.12.50 crs coming up for repayment in FY22 are proposed to be met through liquidation of fixed deposits of Rs.8.58 crs, additional UPFC loan of Rs.2 crs and recovery of current assets of Rs.2 crs. Any shortage of funds in meeting the liabilities is proposed to be met through infusion of USL by the promoters.

ABOUT THE ENTITY

Shanti Gopal Concast Limited was incorporated in 2005. The company’s registered office and manufacturing facility is situated in Mirzapur, UP. Shri Ramesh Kumar Chaudhary and Shri Amit Chaudhary are the key promoters of the company. The company is engaged in manufacturing sponge iron and steel billets. The major raw material for the production process is iron ore, coal and pig iron. The total production capacity of the company is 1,20,000 MT of Sponge Iron and 70,800 MT Billet per annum.

 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 122.21 176.28
EBITDA Rs.Crs. 9.64 11.87
PAT Rs.Crs. 0.43 0.50
Tangible Net Worth Rs.Crs. 53.11 51.94
Total Debt/Tangible Net Worth Times 1.56 1.74
Current Ratio Times 1.33 1.47
KEY COVENANTS OF THE FACILITY RATED

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


STATUS OF NON-COOPERATION WITH PREVIOUS CRA

(1) CRISIL B (Stable)/A4 (INC) for Rs.71.40 crs as on 19 Oct 2020, (2) ICRA B (Stable)/A4 (INC) for Rs.42 crs as on 21 July 2020.

ANY OTHER INFORMATION

NIL

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 44.83
BWR BBB-/Stable
(Reaffirmation)
07May2021
BWR BBB- (Stable) (Issuer did not Cooperate. Based on the best available information)
(Reaffirmation)
12Feb2020
BWR BBB- (Stable)
(Reaffirmation)
13May2019
BWR BBB- (Stable)
(Upgrade)
28Dec2018
BWR BB+ (Stable)
(Upgrade)
Non Fund Based LT 20.89
BWR BBB-/Stable
(Reaffirmation)
07May2021
BWR BBB- (Stable) (Issuer did not Cooperate. Based on the best available information)
(Reaffirmation)
12Feb2020
BWR BBB- (Stable)
(Assignment)
NA
NA
NA
NA
Non Fund Based ST NA
NA
NA
NA
12Feb2020
BWR A3
(Withdrawn)
13May2019
BWR A3
(Upgrade)
28Dec2018
BWR A4+
(Upgrade)
Grand Total 65.72 (Rupees Sixty Five Crores and Seventy Two lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Saurabh Agarwal

Assistant Manager - Ratings Board : +91 11 2341 2232 saurabh.a@brickworkratings.com

Ashwini Mital

Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Shanti Gopal Concast Ltd.
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.)
1 Union Bank of India Term LoanSanctioned 10.93 _ 10.93
2 Union Bank of India Cash CreditSanctioned 25.00 _ 25.00
3 Union Bank of India Bank GuaranteeSanctioned 20.89 _ 20.89
4 Union Bank of India CECLSanctioned 1.25 _ 1.25
5 Union Bank of India GECLSanctioned 7.65 _ 7.65
Total 65.72 0.00 65.72
TOTAL (Rupees Sixty Five Crores and Seventy Two lakhs Only)
ANNEXURE-II
INSTRUMENT DETAILS

InstrumentIssue DateAmount (Rs.Crs)Coupon Rate (%)Maturity DateISIN Particulars
N.A 0

ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
NIL

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