| Kalyani Forge Limited | ||||||
| Rating outlook revised to 'Negative'; Ratings 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 revised its outlook on the long-term bank facilities of Kalyani Forge Ltd (KFL) to ‘Negative’ from ‘Stable’ while reaffirming the rating at ‘Crisil BBB’. Crisil Ratings has also reaffirmed its ‘Crisil A3+’ rating on the short-term bank facilities of the company.
The revision in outlook is on account of stretch in working capital cycle by almost 50 days. This has led to increase in debt levels with working capital utilization increasing to 92% over the past 12 months, with peak utilization of 98%. Revenues remained range bound in April-Dec 2025, compared to same period last fiscal, although, operating margins improved to 11.97% from 9.93% in the said period. However, higher interest costs due to increase in debt impacted overall cash accruals. Sustained improvement in GCAs and debt, with no major debtor and inventory write-off, will remain monitorable.
The ratings continue to reflect the extensive experience of the promoters, established market position of KFL in the domestic forging and machining industry and its above average financial risk profile. These strengths are partially offset by exposure to cyclicality in the automotive (auto) sector, volatility in raw material prices and intense competition, along with modest return on capital employed (RoCE) and large working capital requirement. |
Analytical approach Crisil Ratings has evaluated the standalone business and financial risk profiles of KFL. |
Key rating drivers - Strengths Extensive experience of the promoters The four-decade-long experience of the promoters in the domestic forging and machining industry, their strong understanding of the market dynamics and healthy relationship with reputed original equipment manufacturers in the auto segment, should continue to support the business. Clientele is diverse, with the top five customers contributing 30-35% of the total revenue.
Established market position KFL has an established market position in domestic forging and machining industry with diverse product profile. KFL offers wide variety of products for engines, drivelines and axles which finds its applications in automotive segment, industrial segments, agricultural, railways, marine and power industries. The company is well equipped with combination of hot and warm forging technologies at its plant located in Pune.
Above-average financial risk profile Financial risk profile shall remain moderate, amidst the ongoing capex, and should improve further, driven by better operating performance. Gearing stood at 0.8 time and total outside liabilities to adjusted networth ratio at 1.56 times as on March 31, 2025, supported by networth of Rs 89 crore. Gearing and total outside liabilities to adjusted networth are expected to increase as on March 31, 2026, with increase in debt and working capital parameters. Interest coverage ratio remained at 3.65 times and net cash accrual to adjusted debt ratio at 0.21 time for fiscal 2025, The debt protection metrics are expected to slightly weaken in fiscal 2026 due to increase in finance cost because of rise in debt levels. |
Key rating drivers - Weaknesses Exposure to cyclicality in the auto sector, volatility in raw material prices and intense competition Operating margin remains susceptible to volatility in raw material prices and any increase in prices is passed on to customers with a time lag. The auto sector, which contributes 60-70% of the revenue, also tends to be cyclical. Moreover, intense competition from auto ancillary manufacturers may continue to constrain scalability, pricing power and profitability.
Large working capital requirement GCAs were sizeable at 175-224 days for the three fiscals ended March 31, 2025. GCAs increased to 224 days as on March 31, 2025, from 199 days a year ago, also debtors rose to 159 days as on September 30, 2025, from 125 days as on March 31, 2025, due to increase in credit norms to some customers as per business requirement. The working capital parameters is expected to remain stretched in the near term. Improvement in receivable days and the working capital cycle will remain monitorable. |
Liquidity Adequate Liquidity will remain adequate with sufficient cash and cash equivalent. Cash accrual is expected to remain at Rs 16-19 crore per annum, against yearly debt of Rs 8.5-12.0 crore over the medium term. Bank limit of Rs 70 crore was utilised at about 92% for the 12 months through December 2025. The current ratio and cash & cash equivalent stood at 1.23 times & 2.92 crores as on 31st March 2025. |
Outlook Negative KFL’s credit risk profile will remain under pressure due to stretch in working capital cycle. |
Rating sensitivity factors Upward factors
Downward factors
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About the company KFL, established in 1979, manufactures high-quality, hot-warm and cold-forged products at its plants in Koregaon Bhima and Sanaswadi in Pune, Maharashtra. The company is listed on both National Stock Exchange and Bombay Stock Exchange. Mr. Viraj Kalyani (managing director) oversees the operations of the company. |
Key financials 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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