Rating Rationale
September 05, 2025 | Mumbai
Pokarna Limited
Rating outlook revised to 'Stable'; Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.34.98 Crore
Long Term RatingCrisil A-/Stable (Outlook revised from 'Positive'; Rating Reaffirmed)
Short Term RatingCrisil A2+ (Reaffirmed)
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 facility of Pokarna Limited (PL; part of the Pokarna group) to ‘Stable’ from ‘Positive’ while reaffirming the rating at 'Crisil A-' . The rating on the short-term bank facilities has been reaffirmed at ‘Crisil A2+'. 


The outlook revision reflects the expected pressure on the group's business performance owing to the 50% reciprocal tariff imposed by the US on Indian exports from August 27, 2025. . Pokarna group generated over 80% revenue from the US market in fiscal 2025 and the tariff imposition is likely to significantly impact its revenue and profitability margins as well as the future order flow. The group was earlier facing 2.34% countervailing duty and was not subject to any anti-dumping duty in the US market. With the additional tariff impact, the management is engaged in discussions with its customers to develop strategies to mitigate the impact and is also reviving its relationships in other markets to expand sales reach in the new markets. The ability of the group to geographically diverse its revenue profile and maintain its operating performance, any further revision in tariff or other duties and their impact on the group’s credit profile will be monitorable.

 

The ratings continue to reflect the established market position of the group in the granite and engineered stones businesses, supported by the extensive experience of its promoters, healthy client relationships and moderate operating margin. These strengths are partially offset by exposure to project risks and susceptibility to demand from key markets and fluctuations in foreign exchange (forex) rates.

Analytical approach

Crisil Ratings has combined the business and financial risk profiles of PL and Pokarna Engineered Stone Ltd (PESL), together referred to as the Pokarna group.

 

Unsecured loan of Rs 55.34 crore as on March 31, 2025, from the promoters and related parties as well as intercorporate deposits have been treated as debt as most of the debt is expected to be repaid by March 31, 2026.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers and detailed description

Strengths:

  • Established position in the granite and engineered stones business: The Pokarna group is the largest exporter of quartz surfaces from India and a leading exporter of granite slabs and blocks. The group benefits from its established relationship with Breton SpA and access to the latter’s patented technology for manufacturing quartz surface products. The promoters’ experience of around three decades in the stone industry and healthy relationships with customers and the group’s strong track record of operations have helped establish market position.

 

  • Strong financial risk profile: Networth and gearing were healthy at Rs 777 crore and 0.42 time, respectively, as on March 31, 2025. Strong operating performance will keep the debt protection metrics robust, with interest coverage ratio expected at 7-8 times over the medium term. The financial risk profile will likely remain strong despite the ongoing capital expenditure (capex) for setting up a manufacturing line at the Hyderabad unit.

 

Weaknesses:

  • Exposure to project risks: The group is setting up a new line for manufacturing quartz surfaces at its Hyderabad unit at cost of Rs 440 crore. Though the funding is tied up and the management has executed similar projects in the past, successful implementation of the project without cost and time overruns remains monitorable. Moreover, the group remains exposed to demand risk. Successful commercialisation and stabilisation of the project and ramp up of sales from the new capacity remain monitorables.

 

  • Susceptibility to demand from key markets and fluctuation in forex rates: Exports accounted for over 96% of the revenue. Hence, growth depends on demand from key markets, especially the US. The operating margin also remains susceptible to volatility in input cost and forex rates.

Liquidity: Strong

Expected annual net cash accrual of Rs 120-140 crore during fiscals 2026 -2028 will comfortably cover yearly term debt obligation of Rs 50-60 crore. Bank limit utilisation was moderate, averaging 38% over the 12 months through January 2025. Liquidity is further aided by unencumbered cash and bank balance of Rs 60-70 crore in the current and Exchange Earners' Foreign Currency (EEFC) accounts as on August 31, 2025.

Outlook: Stable

The business and financial performance of the Pokarna group will likely remain healthy over the medium term while the challenges arising from the US tariff will remain monitorable.

Rating sensitivity factors

Upward factors:

  • Steady revenue growth and healthy operating margin resulting in net cash accrual of Rs 190-200 crore
  • Sustenance of healthy financial risk profile and liquidity

 

Downward factors:

  • Weaker-than-expected demand resulting in decline in revenue by 20-25% along with significant fall in the operating margin
  • Large, debt-funded capex or cash outflow in the form of dividend/share buyback or stretched working capital cycle weakening the financial risk profile

About the group

PL was set up as a partnership, Pokarna Granites, in 1991 by Mr Gautam Chand Jain and his family members. The company owns granite quarries in Andhra Pradesh, Telangana and Tamil Nadu. It mines, processes and sells granite blocks and slabs. It diversified into the apparels segment in 2004, manufacturing readymade garments under the Stanza brand (this business is discontinued). PL is listed on the Bombay Stock Exchange and the National Stock Exchange of India Ltd.

 

PESL is a wholly owned subsidiary of PL and is the largest manufacturer and exporter of quartz surfaces. The company exports quartz surfaces under the brand Quantra. The technological know-how and machinery for this division was obtained from Breton SpA (Italy). PL set up an engineered stone (quartz) manufacturing division in 2006, which was later hived off into PESL.

Key financial indicators

As on / for the period ended March 31

 

2025

2024

Operating income

Rs crore

933.56

688.27

Reported profit after tax (PAT)

Rs crore

187.55

87.36

PAT margin

%

20.09

12.69

Adjusted debt / adjusted networth

Times

0.42

0.66

Interest coverage

Times

9.12

5.53

Any other information: Not applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Export Packing Credit NA NA NA 20.00 NA Crisil A2+
NA Foreign Documentary Bills Purchase NA NA NA 5.00 NA Crisil A2+
NA Letter of Credit NA NA NA 5.00 NA Crisil A2+
NA Rupee Term Loan NA NA 30-Sep-29 4.98 NA Crisil A-/Stable

Annexure – List of entities consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Pokarna Limited

Full

Parent

Pokarna Engineered Stone Limited

Wholly owned subsidiary
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT/ST 29.98 Crisil A-/Stable / Crisil A2+ 19-06-25 Crisil A-/Positive / Crisil A2+ 21-03-24 Crisil A-/Stable / Crisil A2+ 03-01-23 Crisil A-/Stable / Crisil A2+ 14-06-22 Crisil BBB+/Positive / Crisil A2 Crisil BBB/Positive / Crisil A3+
Non-Fund Based Facilities ST 5.0 Crisil A2+ 19-06-25 Crisil A2+ 21-03-24 Crisil A2+ 03-01-23 Crisil A2+ 14-06-22 Crisil A2 Crisil A3+
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Export Packing Credit 20 Union Bank Of India Limited Crisil A2+
Foreign Documentary Bills Purchase 5 Union Bank Of India Limited Crisil A2+
Letter of Credit 5 Union Bank Of India Limited Crisil A2+
Rupee Term Loan 4.98 Union Bank Of India Limited Crisil A-/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for consolidation
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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