| Hindustan Forging and Steel Industries | ||||||
| Ratings reaffirmed at 'Crisil BB+ / Stable / Crisil A4+ '; Rated amount enhanced for Bank Debt | ||||||
| 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 reaffirmed its ‘Crisil BB+/Stable/Crisil A4+’ ratings on the bank facilities of Hindustan Forging and Steel Industries (HFSI)
The ratings continue to reflect the extensive experience of the partners in the industrial machinery and consumables industry, and moderate financial risk profile of HFSI. These strengths are partially offset by modest scale of operations, moderate working capital requirement and susceptibility to volatility in raw material prices. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of HFSI.
Unsecured loan of Rs 27.55 crore as on March 31, 2025, from the partners and relatives, has been treated as neither debt nor equity, as the funds are likely to be retained in the business over the medium term. |
Key Rating Drivers - Strengths Extensive experience of the partners: The five-decade-long experience of the partners in the industrial machinery and consumables industry, their strong understanding of market dynamics and established relationships with suppliers and customers will continue to support the business risk profile, with top 6 customers contributing 72% of the revenue in FY25. The operating income of company has consistently grown from 61.6 crore in FY22 to 83 crore in FY25, projected to cross 130 crore in fiscal 2026
Moderate financial risk profile: The capital structure has been moderate due to low reliance on external funds yielding gearing of 0.3 time and total outside liabilities to adjusted networth (TOLANW) ratio of 1.26 times, estimated as on March 31, 2026, compared to 0.47 times and 1.40 times, respectively, as on March 31, 2025. Debt protection metrics were moderate, as reflected in interest coverage and net cash accrual to total debt (NCATD) ratios of 2.77 times and 0.77 times, respectively, estimated for fiscal 2026, against 3.05 times and 0.35 time, respectively, in fiscal 2025. These metrics are likely to improve in the medium term supported by increased scale of operations and no significant debt-funded capital expenditure (capex). |
Key Rating Drivers - Weaknesses Modest scale amid intense competition: The business risk profile is marked by subdued scale and intense competition with dependency on performance of key end user industries which remains cyclical. Intense competition from both large and small players in the steel forging industry limits scalability and operating flexibility.
Susceptibility to volatility in raw material prices: Raw material (ingots) cost forms 65–80% of operating income, and hence profitability is susceptible to sharp volatility in raw material prices. The operating margin of HFSI was volatile at 8.00–10.72% for the past few fiscals.. Sustenance of the margin will remain monitorable over the medium term.
Moderate working capital cycle: Gross current assets were sizeable at 167 days as on March 31, 2025, driven by receivables of 68 days and inventory of 96 days. The company has to provide credit of upto 120 days to customers and maintain inventory of more than 60-90 days. The working capital is expected to improve due to new machinery installed reducing the inventory holding period. However, the working capital cycle will remain monitorable over the medium term. |
Liquidity Adequate Fund-based bank limit utilisation was moderate at 66% on average over the 12 months through February 2026. Annual cash accrual is expected to be Rs 6–8 crore against yearly debt obligations of Rs 2–4 crore over the medium term. The current ratio was 1.02 times as on 31st March 2025. Liquidity is supported by need based funds from partners as reflected in unsecured loans of amount 27.55 crore as on 31st March 2025. |
Outlook Stable Crisil Ratings believes HFSI will continue to benefit from the extensive experience of its partners in the industrial machinery and consumables industry, and its established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company HFSI was incorporated in 2004 and is based in Mumbai with manufacuring facility in Thane. HFSI was formed as a partnership between Mr Parmeshkumar Agarwal and his family members The firm manufactures various grades of carbon and alloy steel forged items used in diverse industries. |
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| 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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