: CRISIL Ratings :
CRISIL Ratings -Bhuval Industries
March 29, 2010
Mumbai
CRISIL ‘BB’ and ‘P4+’ for BHUVAL INDUSTRIES’ bank facilities
Rs.40.00 Million Cash Credit Limit BB/Stable (Assigned)
Rs.360.00 Million Letter of Credit P4+ (Assigned)

CRISIL has assigned its ‘BB/Stable/P4+’ ratings to the bank facilities of Bhuval Industries, which is part of the Kumar group. The ratings reflect the Kumar group’s low net worth and the vulnerability of its margin to fluctuations in steel scrap prices, intense competition in the ship breaking industry, and unfavourable changes in government regulations. These rating weaknesses are partially offset by the experience of the management in the ship breaking industry.

For arriving at the ratings, CRISIL has combined the business and financial risk profiles of Bhuval Industries and Kumar Steel India (KSI), together referred to as the Kumar group. This is because the two entities have a common management, operational linkages, and fungible funds.

Outlook: Stable
CRISIL believes that the Bhuval Industries will benefit over the medium term from the healthy growth prospects in the ship breaking industry. The outlook may be revised to ‘Positive’ if the firm generates higher-than-expected sales and profits, thereby improving its debt protection metrics. Conversely, the outlook may be revised to ‘Negative’ in case the firm’s margin declines sharply, most likely because of a drop in steel scrap prices and failure to recover the cost of purchasing ships.

About the Group
Bhuval Industries, a partnership firm engaged in ship breaking, was set up in April 2004. KSI, set up as a proprietorship firm in 1994, is engaged in ship breaking and recycling. The firm had dismantled around 33 ships till March 2009.

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March 29, 2010

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