Rating Rationale
April 24, 2025 | Mumbai
Auro Impex And Chemicals Limited
Ratings reaffirmed at 'Crisil BBB-/Stable/Crisil A3'
 
Rating Action
Total Bank Loan Facilities RatedRs.45 Crore
Long Term RatingCrisil BBB-/Stable (Reaffirmed)
Short Term RatingCrisil A3 (Reaffirmed)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil BBB-/Stable/Crisil A3’ ratings on the bank loan facilities of ‘Auro Impex and Chemicals Limited’ (AICL).

 

The ratings reflect extensive experience of promoters and established relationship with customers and suppliers and comfortable financial risk profile. These strengths are partially offset by susceptibility of profitability to volatility in raw material prices and cyclicality in the end user industry.

Analytical Approach
Crisil Ratings has combined the business and financial risk profiles of AICL and Auro Industries Limited This is because both these entities, together referred to as the Auro group, operate under the same promoters and management.
 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

  • Extensive experience of the promoters: Industry presence of over three decades in diversified businesses has enabled the promoters to develop a strong understanding of market dynamics and establish healthy relationships with suppliers and customers. Promoter’s ability to recognize opportunities in different segments and consequent introduction of new products is expected to support ramp up of scale of business. The group will continue to benefit from the promoter’s keen grasp of the industry, efficient team of management and healthy relationships with customers such as Larsen and Toubro Ltd, Thermax Ltd, ISGEC etc. On the back of running orders and a healthy order book, the group has recorded a steady turnover of Rs 319 crore in fiscal 2024 at a growth rate of 37% as against the previous fiscal. While healthy demand scenario remained sustained, the company has recorded an estimated turnover of Rs 172 crore in the first nine months of fiscal 2025 and expects to close fiscal 2025 at a turnover of Rs 270 crore. The decline remains on account of dip in steel realisations by about 15% in the fiscal. The group currently has an outstanding order book of about Rs 40 crore as on March, 2025 which provides comfortable revenue visibility for the next few months. Going forward, driven by steady demand from established customer base and addition of new customers, the group is expecting to record turnover of around Rs 300-350 crore over the medium term. Further, fast ramp up of operations in the recently set up capacities for manufacturing high frequency transformer rectifier (HFTR), stainless steel pipes and bidding for government tenders for suppliers in Indian Railways remain critical for further improvement in revenue profile over the medium term.

 

  • Comfortable financial risk profile: Capital structure is healthy as reflected by comfortable networth estimated at over Rs 45 crore, as on March 31st, 2025. The networth is expected to increase over the medium term supported by steady accretion to reserves. Moderate dependence on external debt has kept gearing healthy with gearing expected to remain below unity over the medium term. Total Outside Liabilities to Tangible Networth (TOL/TNW) ratio is also expected to remain comfortable around 1-1.20 times despite sufficient credit availed from suppliers. Debt protection metrics are also expected to remain comfortable with interest coverage and net cash accrual to adjusted debt (NCA/AD) ratios of over 2-2.50 times and 0.10-0.15 times, respectively, going forward.

 

Weaknesses:

  • Susceptibility of profitability to volatility in key raw material prices: Commodity nature of key raw material, steel, exert pricing pressure thereby leading to volatility in profitability. The group has recorded EBITDA Margins of 4% on a consolidated level uptil December, 2024 and is expecting to sustain margins at around 4-4.50% going forward driven by better efficiency through backward integration measures. Sustenance of healthy profitability, however, shall remain a key monitorable.

 

  • Susceptibility to cyclicality in end-user industries: The group caters to the iron and steel, cement, thermal power industries which are cyclical. Therefore, downturn in any of these industries can adversely affect the business.

Liquidity: Adequate

Average bank limit utilisation of fund based limits was around 78% during the 12 months through February, 2025 Cash accrual is expected over Rs 8-10 crore per annum over the medium term which shall be sufficient against term debt repayment obligation of Rs 1.50 crore per annum uptil FY2027. With expected capital expenditure to commercialise from April, 2027 onwards, the cash accruals are expected to be around Rs 9-10 crore per annum which shall be sufficient against term debt repayment obligations of Rs 5 crore from FY2028 onwards. Current ratio was healthy at 1.92 times as on March 31st, 2024. The promoters will likely extend funding support through equity and unsecured loans to meet working capital requirement and debt obligation. Unencumbered cash and bank balance stood at around Rs 5.05 crore as on March 31st, 2025 which provides additional financial flexibility.

Outlook: Stable

The group will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Substantial increase in revenue and profitability resulting in higher cash accrual of over Rs 15 crore
  • Sustenance of healthy financial and liquidity risk profile while maintaining efficient working capital cycle

 

Downward factors:

  • Decline in revenue along with fall in profitability leading to accrual below Rs 4 crore
  • Any large, debt-funded capex and/or any elongated stretch in working capital cycle adversely affecting the financial and liquidity risk profile

About the Group

AICL was incorporated in 1994. It is engaged in manufacturing of pollution control equipment and its accessories such as collecting electrode, discharge electrode, spares and fabricated internal structures etc. Company has manufacturing unit located in Hooghly district of West Bengal and promoted by Mr. Madhusudan Goenka. Recently, the company has undertaken capex to set up a manufacturing plant to manufacture High Frequency Transformer Rectifier (HFTR) as well as a stainless steel pipe capacity of about 4,800 metric tonnes per annum.  As on September 30, 2022, the name of the company was changed to “Auro Impex & Chemicals Limited” on account of conversion of the entity from a Private Limited to Public Limited Company

 

Auro Industries Limited (AIL) is the authorized distributor of TVS Tyres and Tubes within West Bengal. AIL also trades in batteries for UPS, motor vehicles and in lighting products; textiles, lights, iron and steel, insulators and tyres of Exide, TVS, Philips etc.

Key Financial Indicators (Consolidated)

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

319.19

232.75

Reported profit after tax

Rs crore

6.27

6

PAT margins

%

1.96

2.58

Adjusted Debt/Adjusted Net worth

Times

0.80

2.61

Interest coverage

Times

3.36

3.16

Status of non cooperation with previous CRA
AICL has not cooperated with Credit Analysis and Research Ltd (CARE), Infomerics Valuation and Rating Pvt Ltd and ICRA Limited which has classified the company as non-cooperative through release dated 23-Mar-2021, 03-May-2024 and 28-Feb-2018 respectively. The reason provided by CARE, Infomerics and ICRA is non-furnishing of information for monitoring the ratings.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 0.40 NA Crisil A3
NA Cash Credit NA NA NA 22.00 NA Crisil BBB-/Stable
NA Letter of Credit NA NA NA 9.00 NA Crisil A3
NA Proposed Fund-Based Bank Limits NA NA NA 7.75 NA Crisil BBB-/Stable
NA Term Loan NA NA 31-Mar-27 4.92 NA Crisil BBB-/Stable
NA Working Capital Term Loan NA NA 31-Mar-27 0.93 NA Crisil BBB-/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Auro Impex and Chemicals Ltd

100%

Under promoters and same management

Auro Industries Ltd

100%

Under promoters and same management
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 35.6 Crisil BBB-/Stable   -- 25-01-24 Crisil BBB-/Stable 24-03-23 Withdrawn 11-08-22 Crisil BB/Stable Crisil BB/Stable
Non-Fund Based Facilities ST 9.4 Crisil A3   -- 25-01-24 Crisil A3 24-03-23 Withdrawn 11-08-22 Crisil A4+ Crisil A4+
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 0.4 Indian Bank Crisil A3
Cash Credit 22 Indian Bank Crisil BBB-/Stable
Letter of Credit 9 Indian Bank Crisil A3
Proposed Fund-Based Bank Limits 7.75 Not Applicable Crisil BBB-/Stable
Term Loan 4.92 Indian Bank Crisil BBB-/Stable
Working Capital Term Loan 0.93 Indian Bank Crisil BBB-/Stable
Criteria Details
Links to related criteria
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for consolidation

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