| Eastern Treads Limited | ||||||
| Long-term rating downgraded to 'Crisil B- / Stable'; Short-term rating reaffirmed | ||||||
| Rating Action | ||||||
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| 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 downgraded its rating on the long term bank facilities of Eastern Treads Limited (ETL) to ‘Crisil B-/Stable’ from ‘Crisil B/Stable’ and has reaffirmed its ‘Crisil A4’ rating on the short term bank facility. The downgrade factors in the expected impact on volumes and profitability on account of increase in prices of the key input costs, leading to impact on the business risk profile. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of ETL. |
Key Rating Drivers - Weaknesses Below-average financial risk profile: The financial risk profile is constrained by leveraged capital structure and modest debt protection metrics. Total outside liabilities to tangible networth (TOLTNW) ratio was negative 4.54 times as on March 31, 2025, on account of losses faced. Debt protection metrics have significantly weakened after reduced profitability, as indicated by interest coverage and net cash accrual to total debt (NCATD) ratios of negative 0.88 time and negative 0.09 time in fiscal 2025. Furthermore, the company’s working capital-intensive operations are likely to result in higher dependence on external borrowings. Consequently, the financial metrics are likely to remain at a similar range in the near term. Susceptibility to volatility in crude linked raw materials prices, impacting profitability and volume: The company’s operations remain exposed to significant volatility in key raw materials such as PBR and carbon black, both of which are largely linked to crude oil–derived feedstocks. During recent periods, prices of these inputs have witnessed sharp fluctuations, particularly due to geopolitical developments in the Middle East affecting crude oil dynamics and supply chains. Such volatility results in elevated and unpredictable input costs. Consequently, profitability remains vulnerable to cost spikes, and higher input prices can in turn have an impact on volumes. Hence, the company’s ability to sustain volumes and improve margins amid continued raw material price volatility will remain a key monitorable. |
Key Rating Drivers - Strengths Extensive experience of the promoters in the rubber treads industry and longstanding relationships with key customers and suppliers: The promoters have been in the rubber treads industry for over three decades now and this has enabled them to have a strong understanding of the market dynamics. Benefits from their experience and established relationships with customers and suppliers should continue to support the business. |
Liquidity Stretched Bank limit utilization was high at 95.04% on average for the 12 months through December 2025. Net cash accrual is expected to remain modest, over the medium term, owing to reduced profitability. However, need-based unsecured loans from promoters’ support liquidity. The current ratio remains moderate at 0.55 times as on March 31, 2025. The promoters are likely to extend support in the form of unsecured loans to meet the working capital requirement and debt obligation. |
Outlook Stable Crisil Ratings believes ETL will continue to benefit from its extensive experience and support from its promoters |
Rating sensitivity factors Upward Factors
Downward Factors
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About the Company Incorporated in 1993 and based in Kochi, Kerala, ETL manufactures rubber treads. Promoted by Mr M E Meeran, the company is managed by Mr Navas Meeran. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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