| K J International | ||||||
| Ratings reaffirmed at 'Crisil BBB-/Stable/Crisil A3'; 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 BBB-/Stable/Crisil A3’ ratings on the bank facilities of K J International (KJI).
The ratings continue to reflect the established market position and extensive experience of the partners, and its healthy financial risk profile. These strengths are partially offset by large working capital requirement and modest scale of operations. |
Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of KJI. |
Key Rating Drivers & Detailed Description Strengths: Established market position and extensive experience of the partners: The partners have experience of 10 years in the steel industry; their strong understanding of market dynamics and healthy relationships with customers and suppliers will continue to support the business. With regular measures to increase production efficiency, capacity has improved owing to installation of continuous casting machines and electromagnetic stirring for optimising continuous casting and improved steel quality. The firm is focusing on increasing export, which is expected to remain at 30-35%. Benefits of modifications in the installed capacity and expansion in installed capacities are expected to accrue from fiscal 2026. Growth in business amid strong market position will remain monitorable over the medium term.
Healthy financial risk profile: The financial risk profile will remain comfortable, supported by moderate reliance on external debt despite continuous debt-funded capital expenditure (capex). Networth is projected to improve owing to growth in the business risk profile and continuous accretion to reserve to Rs 60-62 crore over the medium term (~Rs 52 crore as on March 31, 2025). Gearing will remain below 1 time (~0.8 time as on March 31, 2025). Debt protection metrics will be adequate, with interest coverage and net cash accrual to adjusted debt ratios expected at 3-4 times and 0.2-0.3 time, respectively, over the medium term (3.2 times and 0.2 time, respectively, in fiscal 2025). Any major debt-funded capex weakening the financial risk profile will remain a key monitorable.
Weaknesses: Large working capital requirement: Gross current assets (GCAs) were at 140-150 days in the past three fiscals and at 137 days as on March 31, 2025, driven by receivables of 55-60 days and inventory of 50-75 days. Considering the high requirement of inventory levels the operation shall continue to remain the working capital intensive as reflected in the high bank utilisation of an average of 91% over the past 12 months through April 2025. However, the working capital cycle is supported by payables of 50-60 days. Enhancement in the working capital limit and improvement in the working capital cycle, amid scaling up of operations and strengthening of liquidity, will remain a key rating sensitivity factor.
Modest scale of operations: The steel industry is highly fragmented. Intense competition may continue to constrain scalability, pricing power and profitability. Revenue stood at Rs 269 crore in fiscal 2025 (Rs 236 crore in fiscal 2025), as against the projected Rs 295 crore, owing to expansion of facilities in fiscal 2024. With regular measures to increase production efficiency, the capacity has improved. Also, the firm is focusing on increasing exports to 30-35% over the medium term. The ability of the firm to scale up volumetric sales along with an increase in net cash accurals will remain a key monitorable. |
Liquidity: Adequate Bank limit utilisation was high at 91% on average over the 12 months through April 2025. (Despite timely enhancement, bank limit utilisation continues to remain high). Cash accrual, expected at Rs 12-14 crore per fiscal, will sufficiently cover yearly term debt obligation of Rs 4-5 crore over the medium term. In addition, the surplus will cushion the liquidity.
The current ratio will remain moderate at 1.4-1.5 times over the medium term, compared with 1.48 times as on March 31, 2025. The promoters will likely extend equity and unsecured loans to meet working capital requirement and debt obligation. |
Outlook: Stable KJI will continue to benefit from the extensive experience of the partners and their established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company KJI, set up in 2010, manufactures alloy steel flats/bars through the induction furnace route. Its facility in Jalandhar, Punjab, has a 7-MT induction furnace with installed capacity of 100 MT per day and a steel rolling mill capacity of 300 MT per day; the capacities are expected to improve with the planned capex in the next two fiscals. Mr Sahil Goel and Mr Pawan Kumar own and manage the business. |
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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Criteria Details
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