April 01, 2013


Aashiana Rolling Mills Limited

Rating upgraded to CRISIL BBB/Stable

Total Bank Loan Facilities Rated
Rs.260 Million (Enhanced from Rs.235 Million)
Long-Term Rating
CRISIL BBB/Stable (Upgraded from CRISIL BBB-/Positive)

(Refer to Annexure 1 for details on facilities)

CRISIL has upgraded its rating on the long-term bank facilities of Aashiana Rolling Mills Ltd (ARML) to ‘CRISIL BBB/Stable’ from ‘CRISIL BBB-/Positive.

The rating upgrade reflects expected improvement in ARML’s financial risk profile with improvement in ARML’s gearing and debt protection metrics over the medium term, supported by expected improvement in the company’s cash accruals owing to its increased scale of operations, and the absence of any major debt-funded capex plans over the medium term. The rating upgrade also takes into account the higher-than-expected growth in the company’s scale of operations under its own brand ‘Friends TMT’, marked by healthy estimated compound annual growth rate (CAGR) of around 26 per cent for the four years ending 2012-13 (refers to financial year, April 1 to March 31). The company’s working capital management remains efficiently managed, as reflected in its low gross current asset (GCA days) of 33 days as on March 31, 2012. This has led to low reliance on bank funding and hence a healthy gearing of under 1 time since 2010-11.

The rating reflects ARML’s efficient working capital management, moderate financial risk profile, marked by moderate gearing and healthy debt protection metrics, and the extensive experience of its promoters in the steel long products industry. These rating strengths are partially offset by ARML’s exposure to risks related to presence in the competitive and fragmented TMT steel bar industry, small scale of operations and geographical concentration in revenues.

Outlook: Stable

CRISIL believes that ARML will maintain its business risk profile, backed by the experience of its promoters in the steel long products industry, coupled with healthy brand recognition in Gujarat state. The outlook may be revised to ‘Positive’ if the company’s operating profitability increases significantly, leading to larger-than-expected cash accruals, while the company maintains its healthy capital structure. Conversely, the outlook may be revised to ‘Negative’ in case the company’s operating performance or working capital management deteriorates significantly, or in case ARML undertakes any large, debt-funded capex programme, leading to deterioration in its capital structure.

About the Company

Established in 2004 by Mr. D K Goyal and his brother-in-law Mr. Pradeep Garg, ARML manufactures TMT bars under its own brand ‘Friends TMT’ and started commercial production in 2008 in Ahmedabad (Gujarat). The promoters have been in the TMT steel bar industry since 1997 through group companies Friends Ispat Ltd (Friends Ispat) and Darpan Ispat Pvt Ltd (Darpan Ispat).

ARML reported a profit after tax (PAT) of Rs.28.4 million on net sales of Rs.2.81 billion for 2011-12, as against a PAT of Rs.17.8 million on net sales of Rs.2.11 billion for 2010-11.

Annexure 1 - Details of various bank facilities

Current facilities
Previous facilities
Amount (Mln)
Cash Credit
Cash Credit
CRISIL BBB-/Positive
Term Loan
Term Loan
CRISIL BBB-/Positive

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Last updated: April 30, 2012

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April 01, 2013