Key Rating Drivers & Detailed Description

Strengths:

Healthy financial risk profile: Networth increased to Rs 117.58 crore as on March 31, 2021, from Rs 98.96 crore as on March 31, 2020, due to accretion to reserves and no withdrawal. Gearing has remained at less than 1 time (0.63 time as on March 31, 2021). Debt protection metrics continue to be above average, with interest coverage and net cash accrual to debt ratios of 4.75 times and 0.36 time, respectively, for fiscal 2021.

Established brand and supplier relationships: The group's brand has a strong recall in the thermo mechanically treated (TMT) bars industry in Jharkhand and Bihar. It has more than 500 dealers in Jharkhand and is further expanding into Bihar, Uttar Pradesh and West Bengal. Moreover, the promoters have established healthy relationships with raw material suppliers, such as Atibir Industries Company Ltd, mines of Coal India Ltd (rated 'CRISIL AAA/CCR AAA/Stable/CRISIL A1+') and various pellet manufacturers.

Weaknesses:

Exposure to intense competition: The secondary steel industry is highly fragmented with many unorganised players having small capacities. This is because of low entry barriers and limited differentiation in end products.

Working capital-intensive operations: Gross current assets (GCAs) were 119 days as on March 31, 2021, because of sizeable inventory of 46 days. There is no fixed policy on maintaining finished goods inventory, which varies depending on the market scenario. However, the group attempts to maintain it around 30 days to ensure seamless delivery.

Key Financial Indicators

Annexure - Details of Instrument(s)

Annexure - List of Entities Consolidated

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