CRISIL has assigned its ‘BB+/Stable/P4+’ ratings to the bank facilities of Shri Khatu Shyam Alloys Pvt Ltd (SKSAPL). The ratings reflect SKSAPL’s modest scale of operations, vulnerability to cyclicality in the steel industry, and limited product profile and track record in production of thermo-mechanically treated (TMT) bars. These rating weaknesses are partially offset by the expected improvement in SKSAPL’s financial risk profile over the medium term.

Outlook: Stable
CRISIL believes that SKSAPL will maintain its financial risk profile, backed by its healthy cash accruals and debt protection indicators, over the medium term. The outlook may be revised to ‘Positive’ if SKSAPL increases its scale of operations significantly, while sustaining its high profitability. Conversely, the outlook may be revised to ‘Negative’ if lower-than-expected capacity utilisation or volatility in raw material prices leads to deterioration in the company’s profitability, and consequently, its debt protection metrics.

About the Company
Established in 2004 as a partnership firm Shri Khatu Shyam Industries by Mr Ramavtar Agarwal and his family, SKSAPL was renamed and incorporated in November 2009 as a private limited company. SKSAPL manufactures TMT bars. The company initially produced mild steel (MS) ingots, and integrated forward into the production of TMT bars in 2008-09 (refers to financial year, April 1 to March 31). The company’s manufacturing unit in Silvassa (Union Territory of Dadra and Nagar Haveli) has rolling capacity of 60,000 tonnes per annum.

SKSAPL reported a net loss of Rs.15.39 million on net sales of Rs.513.31 million for 2008-09, against a profit after tax of Rs.39.90 million on net sales of Rs.249.49 million for 2007-08.