Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 43.98 Crs. of Kargil Steel and Power Pvt.Ltd.
Particulars
Facilities**
Amount(Rs.Crs.)
Tenure
Rating#
Fund Based
43.98
Long Term
BWR BB
/Stable
Assignment
Non Fund Based
(1.80)
Short Term
BWR A4 +
Assignment
Grand Total
43.98
(Rupees Forty Three Crores and Ninety 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 relied on the audited financial statements of Kargil Steel and Power Pvt. Ltd. for FY23, FY24, and FY25, along with the projected financials for FY26 and FY27, and other information and clarifications provided by the company’s management and bankers, to arrive at the present ratings.
Brickwork Ratings has assigned the ratings BWR BB/Stable/A4+ for the bank loan facilities amounting to Rs. 43.98 crore. The ratings derive strength from the promoters’ extensive experience in the steel industry, the timely completion of the project with commercial operations commencing from April 2025, and established relationships with suppliers ensuring a consistent supply of raw materials.
However, the ratings are constrained by the limited operational track record, as the company has recently commenced operations, a moderate scale of operations, high leverage reflected in elevated gearing levels, and exposure to inherent risks associated with the steel industry, including cyclicality and raw material price volatility.
The outlook is Stable, reflecting BWR’s expectation that the company’s business and financial risk profile will remain steady over the medium term. The outlook may be revised to Positive with sustained growth in revenue and profitability or to Negative in case of weaker performance or delays in debt servicing.
KEY RATING DRIVERS
Credit Strengths:
Experienced Promoters and Established Group Presence: :
The promoters, Mr. Ashwani Garg, Mr. Munish Kumar, Mr. Rajeev Singla, and Mr. Keshav Garg, possess extensive experience in the steel trading and manufacturing business through their other firm, Kundlas Lohudyog. The group’s established presence in the steel industry has helped develop long-standing relationships with suppliers and customers, providing operational stability and business support to KSPPL. The promoters have demonstrated commitment to the project through continuous equity infusion and unsecured loans to support the capital structure and working capital needs, indicating strong financial and operational backing.
Modern Manufacturing Facility with Latest Technology: :
The company has installed machinery and adopted the latest equipment and technology, which is expected to enhance production efficiency, product quality, and cost competitiveness once full-scale operations commence.
Favorable Location Advantage: :
The manufacturing facility is located in Kathua, Jammu & Kashmir — a region strategically positioned near raw material sources and key steel-consuming regions in North India (Punjab, Haryana, and Himachal Pradesh). This provides logistical advantages and access to a growing regional market.
Credit Risks:
Nascent Stage of Operations: :
Commercial operations commenced only in FY26, leading to limited operational track record. The company remains exposed to the risks associated with stabilization of operations, achieving optimal capacity utilization, and establishing a strong market position in a competitive steel segment.
Working Capital Intensive Nature of Operations: :
Steel manufacturing typically involves high inventory levels and elongated receivable cycles, leading to significant working capital requirements. This could strain liquidity, especially during the initial years of operation.
Cyclicality of the Steel Industry: :
The steel sector is inherently cyclical and closely linked to macroeconomic factors such as GDP growth, infrastructure spending, and real estate activity. Any downturn in these sectors could affect demand and profitability.
ANALYTICAL APPROACH - Standalone
For arriving at its ratings, BWR has considered the standalone approach for the company. BWR has applied its rating methodology as detailed in the rating criteria below (hyperlinks provided at the end of this rationale)
RATING SENSITIVITIES
Positive:
Sustained improvement in revenue above Rs.185 crore and EBITDA margin above 9.5% in FY26.
Sustained improvement in profitability and liquidity ratio in FY 26.
Strengthening of capital structure and coverage indicators by maintaining overall gearing below 2.0x and interest coverage ratio above 3.5.0x on a sustained basis.
Negative:
Slower-than-expected scale-up of operations, any substantial reduction or deviation in financial performance projected.
LIQUIDITY INDICATORS - Adequate
The company’s liquidity position in FY25 is adequate, characterized by a sufficient cushion in accruals of Rs. 0.01 crore vis-à-vis repayment obligations (CPLTD) of Rs. 0.00 crore for FY25, as term loan repayments began in July 2025. The current ratio stood at 1.0x, supported by a cash balance of Rs. 0.47 crore in FY25.Bank limits were utilized to the extent of around 40%.
With commercial operations commencing in April 2025, liquidity is expected to improve in FY26, supported by projected cash accruals of Rs. 7.79 crore against CPLTD of Rs. 3.22 crore, an ISCR of 3.95x, and a revised DSCR of 2.05x, along with a cash balance of Rs. 0.45 crore. Overall, liquidity is considered adequate at present and is expected to remain comfortable as operations stabilize in FY26.
ABOUT THE ENTITY
Macro Economic Indicator
Sector
Industry
Basic Industry
Commodities
Metals & Mining
Ferrous Metals
Iron & Steel
M/s Kargil Steel and Power Private Limited was incorporated on June 9, 2021, with its registered and corporate office in Panchkula, Haryana. The company’s manufacturing facility is located in Kathua, Jammu and Kashmir, spread across an area of 15,327.47 square meters. The company is engaged in the manufacturing of TMT bars with an installed capacity of 60,000 metric tonnes per annum. The company is promoted by four promoters, Mr. Ashwani Garg, Mr. Munish Kumar, Mr. Rajeev Singla, and Mr. Keshav Garg.
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.
Not Available
Not Available
Not Available
EBITDA
Rs.Crs.
Not Available
Not Available
-1.43
PAT
Rs.Crs.
Not Available
Not Available
-0.08
Tangible Net Worth
Rs.Crs.
2.39
7.82
9.93
Total Debt / Tangible Net Worth
Times
Not Available
1.13
4.00
Current Ratio
Times
0.36
1.30
1.00
KEY COVENANTS OF THE FACILITY RATED
Punjab National Bank:
Purpose/ End use of facility for sanctioned amount Rs. 23.00 Cr for purchase of plant & machinery to set up a steel manufacturing unit. Minimum margin of 25% to be maintained. Bank to verify end-use and project progress monthly during implementation and conduct half-yearly security checks post completion.
Purpose/ End use of facility for sanctioned amount of Rs. 4.75 Cr for installation of Solar Photovoltaic System. Minimum margin of 25% to be maintained. Bank to conduct monthly end-use verification during project implementation and half-yearly security checks post completion. (The banker has confirmed over a telephonic conversation that Kargil Steel and Power Pvt. Ltd. has provided a written communication stating that they will not be utilizing the undisbursed portion of the Term Loan amounting to Rs. 4.75 crore sanctioned by PNB Bank for the Solar Photovoltaic System. The project has been completed with a lower capacity due to space constraints. It was also confirmed that the client has not requested any rescheduling of the loan repayment, and the facility is expected to be closed earlier than originally planned.)
Inland Letter of Guarantee Limit (Sublimit of FBWC) of Rs. 1.80 Cr for issuing performance and financial guarantees towards tenders and electricity/security deposits; validity of 12 months. Minimum margin of 15% (in the form of FDR)
Unsecured loans shall be subordinated to the Term Loan.
The terms of sanction include standard covenants normally stipulated for such facilities.
HDFC Bank:
Cash Credit facility of Rs. 15.00 Cr under Multiple Banking Arrangement (with PNB). First pari passu charge on current and fixed assets with PNB; exclusive FD of Rs. 2 Cr; personal and corporate guarantees from promoters and M/s Kundlas Loh Udyog. 25% margin on stock (net of creditors) and book debts ≤90 days; DP and MPBF to govern limit utilization.
Purpose of Term Loan Rs. 11.75 Crs (Undisbursed), Capex for new Billet and Angle production line. 25% margin to be funded upfront; cost overrun to be borne by the borrower. Pari Passu charge with PNB on fixed and current assets; exclusive charge on new P&M and Rs. 2 Cr FD. Personal guarantees of all directors and a corporate guarantee from Kundlas Loh Udyog. Disbursement Conditions:Post-ACOD release with CA certification of margin infusion; prior NOC needed for new borrowings. (The management, via email, confirmed that they had initially planned to install a Rolling Mill for the manufacturing of Angles and Channels, for which a Term Loan of Rs. 11.75 crore had been sanctioned by HDFC Bank. However, after a detailed evaluation and internal discussions, the management has decided to drop the proposed project. Consequently, the company will not be proceeding with the disbursement of the sanctioned Term Loan.)
The terms of sanction include standard covenants normally stipulated for such facilities.
STATUS OF NON-COOPERATION WITH PREVIOUS CRA
Creadit Rating Agency
Status and Reason for Non-Cooparation
Date of Press Release
CRISIL
CRISIL Rating continues to be ‘CRISIL BB-/Stable Issuer not cooperating’; Rating Withdrawn, Issuer not cooperating, based on best-available information.
22Aug2025
RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)
Facilities
Current Rating (2025)
2024
2023
2022
Type
Tenure
Amount (Rs.Crs.)
Rating
Date
Rating
Date
Rating
Date
Rating
Fund Based
LT
43.98
BWR BB/Stable
(Assignment)
NA
NA
NA
NA
NA
NA
NFB SubLimit
ST
(1.80)
BWR A4+
(Assignment)
NA
NA
NA
NA
NA
NA
Grand Total
43.98
(Rupees Forty Three Crores and Ninety Eight lakhs Only)
The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.
About Brickwork Ratings
Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,560 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner.
Disclaimer
Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.
BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).
BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.
The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.
BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.
BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.
Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.
BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.
This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.
BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.
