| Maithan Alloys Limited | ||||||
| Long-term rating downgraded to 'Crisil AA-/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 Maithan Alloys Limited (MAL) to ‘Crisil AA-/Stable’ from ‘Crisil AA/Negative’ while reaffirming the short-term rating at ‘Crisil A1+’. The rating action reflects continuation of subdued business risk profile of MAL, particularly due to a consistently muted top line and pressure on profitability. In the first nine months of fiscal 2026, sales volume of over 1.8 lakh metric tons and moderate realization of around Rs 80,000 per ton, resulted in operating income (including other related income) being limited to Rs 1,613 crore. Power costs, forming around 30% of the total cost of sales, continue to have a significant bearing on profitability, resulting in an operating margin of 9.5% in the first nine months of fiscal 2026. In the absence of a significant reduction in power costs, the recovery in the scale of operations remains lower than expected, and scale and profitability are likely to remain range-bound over the medium term. For MAL, operating margin lowered to 7–10% in the two fiscals through 2025, down from over 13–37% in the five fiscals through 2023. In fiscal 2023, the power tariff increased and sustained over Rs 6 per unit from around Rs 4–5 per unit previously. This resulted in high power costs causing a consistent year-on-year fall in production. Low sales volume, coupled with a moderation in realizations to around Rs 80,000 per ton in fiscals 2024–25 from over Rs 1,10,000 per ton in fiscal 2022–23, limited overall revenue to around Rs 1,700-1,800 crore in fiscals 2024-25. These factors, combined with high investments of Rs 3,636 crore as of March 31, 2025 (up from Rs 870 crore on March 31, 2023) in current and non-current assets—such as equity shares, mutual funds, alternate investment funds, and land held for sale—resulted in a low return on capital employed (RoCE) of 6–9% in fiscals 2024–25 (down from 27% in fiscal 2023). RoCE is expected to be sustained at around the same level on the basis of limited contribution from the ferro alloy segment over the medium term. The ratings continue to reflect extensive experience of promoters and strong financial risk profile. These strengths are partially offset by exposure to volatility in prices of raw materials and finished goods and cyclicality in the ferro alloys industry. |
Analytical Approach Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Strong financial risk profile: The group’s strong capital structure is supported by a healthy net worth of Rs 3,739 crore as of March 31, 2025, and low external debt. While gearing and total outside liabilities to total net worth (TOL/TNW) ratios increased to 0.2 times and 0.3 times respectively on March 31, 2025—up from 0.0 times and 0.1 times a year earlier—these metrics remain comfortable. This rise was due to short-term borrowing for working capital to fund a sizeable land purchase (held for sale) amounting to approximately Rs 580 crore. Notably, the group prepaid debt of about Rs 280 crore in September 2025, which was originally due by March 2026. Interest coverage remain robust at 8.5 times as of March 31, 2025. Given the absence of large, debt-funded capital expenditure (capex), the limited exposure to external debt should keep the financial risk profile healthy over the medium term, despite the profitability exposure to volatile commodity prices and power-intensive operations. |
Key Rating Drivers - Weaknesses |
Liquidity Superior |
Outlook Stable Crisil Ratings believes MAL will continue to benefit from the extensive experience of its promoters and a healthy financial risk profile. |
Rating sensitivity factors Upward factors:
Downward factors:
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About the Group MAL, established in 1985, manufactures ferroalloys such as ferro manganese, ferro silicon and silico manganese, with varying proportions of other chemical compositions. The company is listed on the Bombay Stock Exchange and National Stock Exchange. MAL’s subsidiaries, MFPL and IMFAL, are also engaged in the same line of business while its other subsidiaries do not have significant business operations. The Maithan group is managed by Mr S. C. Agarwalla and his sons, Mr Subodh Agarwalla and Mr Sudhanshu Agarwalla. |
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 - List of Entities Consolidated
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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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