CRISIL has assigned its rating of ‘B+/Stable’ to Sarkar Gray Iron Products’ (SGIP’s) bank facilities. The rating reflects SGIP’s weak financial risk profile due to large working capital requirements, and the firm’s exposure to risks relating to small scale of operations, and to fluctuations in raw material prices. These weaknesses are partially offset by the benefits that SGIP derives from its promoters’ large experience in the steel utensils business.

Outlook: Stable
CRISIL believes that SGIP’s scale of operations will remain small and financial risk profile will remain weak over the medium term. The outlook may be revised to ‘Positive’ if the firm’s scale of operations improves substantially, or if fresh equity infusions strengthen its financial risk profile. Conversely, the outlook may be revised to ‘Negative’ if deterioration in operating margins lead to low cash accruals, or if the firm undertakes large, debt-funded capital expenditure.

About the Firm
Set by Mr. Girdharilal Thard, and his son, Mr. Dhiraj Thard, SGIP manufactures steel utensils and is part of the Sarkar Gray group, comprising three other entities Shree Radhe Krishna Smelters Pvt Ltd (SRKSPL), Vishwarupa Steel Pvt Ltd (VSPL), and Vishwarupa Tubes Pvt Ltd. SGIP’s manufacturing plant is in Howrah (West Bengal). It sells its products in West Bengal, Bihar, Jharkhand, and Orissa.

SGIP reported a profit after tax (PAT) of Rs.1.8 million on net sales of Rs.208 million for 2008-09 (refers to financial year, April 1 to March 31), as against a PAT of Rs.1.2 million on net sales of Rs.153 million for 2007-08.