September 08, 2015
Mumbai
Real Ispat and Power Limited
 
'CRISIL A-/Stable/CRISIL A2+' assigned to bank debt
 
Total Bank Loan Facilities Rated Rs.767 Million
Long Term Rating CRISIL A-/Stable (Assigned)
Short Term Rating CRISIL A2+ (Assigned)
(Refer to Annexure 1 for Facility-wise details)

CRISIL has assigned its 'CRISIL A-/Stable/CRISIL A2+' ratings to the bank facilities of Real Ispat and Power Ltd (RIPL; part of Real group). The ratings reflect the Real group's strong financial risk profile because of a robust net worth, comfortable capital structure, and healthy debt protection metrics. The ratings also factor in group's strong market position in central India, backed by its integrated operations and established clientele. These rating strengths are partially offset by the susceptibility of the Real group's operating margin to adverse fluctuations in raw material prices, changes in government regulations, and cyclicality in the steel industry.

For arriving at the ratings, CRISIL has combined the business and financial risk profiles of RIPL, Shivalay Ispat and Power Pvt Ltd (SIPPL), Real Power Pvt Ltd (RPPL), and API Ispat and Powertech Pvt Ltd (API). This is because all the four companies share a common management and have significant financial fungibility. Moreover, RIPL, SIPPL and API share significant operational synergies as they are in the same business.

Outlook: Stable

CRISIL believes that the Real group will continue to benefit over the medium term from its integrated operations, established market position in central India, and well-managed cost control system partly shielding it from declining steel prices. The group's financial risk profile is expected to remain robust over this period, backed by a very comfortable capital structure and the absence of any major debt-funded capital expenditure (capex) plan. The outlook may be revised to 'Positive' if the Real group achieves a significant increase in its scale of operations while sustaining its profitability and financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of significant weakening in the group's operating performance, leading to low cash accrual, or if it undertakes a large debt-funded capex programme, constraining its financial risk profile. 

About the Group

The Real group is a Raipur (Chhattisgarh)-based integrated steel producing group of companies, promoted by three members of the Agrawal family: Mr. Rajesh Agrawal, Mr. Umesh Agrawal, and Mr. Ramesh Agrawal. The group has a sponge iron plant (with a capacity of 255,000 tonnes per annum [tpa]), an induction furnace (306,000 tpa), an automatic hot rolling mill (200,000 tpa), a wire-drawing facility (100,000 tpa), and a power plant (43 megawatts).

RIPL, the flagship company of the Real group, was originally incorporated on October 4, 1999, as Real Ispat Pvt Ltd, with the objective of manufacturing steel. It was reconstituted as a limited company with the current name on May 6, 2005. The company's final products, thermos-mechanically-treated (TMT) bars, wire rods, and steel wires are sold under the GK
TMT brand.

The Real group's profit after tax (PAT) and net sales were Rs.212.7 million and Rs.8.32 billion, respectively, for 2014-15 (refers to financial year, April 1 to March 31), against Rs.144.1 million and Rs.6.23 billion, respectively, for 2013-14.

RIPL's standalone PAT and net sales were Rs.126.5 million and Rs.6.48 billion, respectively, for 2014-15, against Rs.92.9 million and Rs.5.65 billion for 2013-14.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Letter of Credit 250 CRISIL A2+ -- 0 --
Foreign Exchange Facility 7 CRISIL A2+ -- 0 --
Bank Guarantee 10 CRISIL A2+ -- 0 --
Cash Credit 500 CRISIL A-/Stable -- 0 --
Total 767 -- Total 0 --
Media Contacts
 Analytical Contacts
 Customer Service Helpdesk
Tanuja Abhinandan
Media Relations
CRISIL Limited
Phone: +91 22 3342 1818
Email:tanuja.abhinandan@crisil.com

Jyoti Parmar
Media Relations
CRISIL Limited
Phone: +91 22 3342 1835
E-mail: jyoti.parmar@crisil.com
Vasudevan R
Director - CRISIL Ratings
Phone:+91 44 6656 3100
Email: vasudevan.r@crisil.com

Aditya Munshi
Associate Director - CRISIL Ratings
Phone:+91 22 4097 8105
Email: aditya.munshi@crisil.com 		Timings: 10.00 am TO 7.00 pm
Toll free Number:1800 267 1301
Email: CRISILratingdesk@crisil.com

 

Note:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.

Crisil complexity levels are assigned to various types of financial instruments. The crisil complexity levels are available on www.crisil.com/complexity-levels.investors are advised to refer to the crisil complexity levels for instruments that they desire to invest in. Investors may also call the Customer Service Helpdesk with queries on specific instruments.


About CRISIL LIMITED
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

About CRISIL Ratings
CRISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over 75,000 entities, by far the largest number in India. We are a full-service rating agency. We rate the entire range of debt instruments: bank loans, certificates of deposit, commercial paper, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, perpetual bonds, and partial guarantees. CRISIL sets the standards in every aspect of the credit rating business. We have instituted several innovations in India including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We pioneered a globally unique and affordable rating service for Small and Medium Enterprises (SMEs).This has significantly expanded the market for ratings and is improving SMEs' access to affordable finance. We have an active outreach programme with issuers, investors and regulators to maintain a high level of transparency regarding our rating criteria and to disseminate our analytical insights and knowledge.

CRISIL PRIVACY NOTICE
CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of McGraw Hill Financial you may find of interest.
For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view McGraw Hill Financial's Customer Privacy Policy at http://www.mhfi.com/privacy.
Last updated: August, 2014

Disclaimer:A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. Rating action may be initiated as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings' rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.

September 08, 2015

http://www.crisil.com