| Rajputana Stainless Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB/Stable/Crisil A3+' | ||||||
| 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 ratings on the bank facilities of Rajputana Stainless Limited (RSL) at 'Crisil BBB/Stable/Crisil A3+’.
The rating reflects RSL's Extensive experience of the promoters in steel industry, Integrated operations and operating efficiency and moderate debt protection metrics. These strengths are partially offset by working capital-intensive operations, susceptibility of profitability to intense competition and susceptibility to downturns in end-user industry. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profile of RSL. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters in steel industry: Promoters have been in the steel industry for more than three decades, which has aided in their comprehension of the dynamics of the sector and their ability to manage the business cycle. They have solidified their connections with a vast base of suppliers and customers. The company being in healthy demand scenario has estimated to achieve turnover of over Rs 932 crore in FY 25 as against Rs 909 crore in FY 24, exhibiting growth on the back of volume growth despite moderation in realizations. Crisil Ratings believes benefits from the extensive industry experience of the promoters would continue over the medium term.
Integrated operations and operating efficiency: The integrated nature of operations supports the operating margin. Company achieved operating margins of 7.9% in fiscal 2025 against 6.8% in fiscal 2024. The company has strategically invested in modernization and backward integration over the years. Operations are also supported by imports and captive power plants which enable manufacturing at a low cost of power.
Moderate debt protection metrics: Debt protection metrics also remain moderate with interest cover and net cash accruals to total debt (NCA/TD) of 4.81 time and 0.52 time respectively in fiscal 2025. Debt protection metrics have improved in fiscal 2025 and are expected to improve further over the medium term due to an improvement in profitability.
Weaknesses: Moderately working capital intensive operations: The company’s operations are working capital intensive indicated by gross current assets of around 110-120 days estimated as on March 31, 2025. The company’s debtors and inventory have increased to around 55-60 days as on March 31, 2025. Consequently, utilization has remained upwards 90% in the past 3-4 months ended March 31, 2025. Improvement in working capital management along with moderation in fund-based limit utilization will remain key monitorable.
Susceptibility of profitability to intense competition: As raw material accounts for 75-80% of production cost, the operating margin will remain exposed to sharp volatility in raw material prices. Further, the company is susceptible to the risk of volatility in the price of raw materials such as scraps, ferrous alloy, and base metals; the cost of input material varies depending on the demand-supply scenario. Any price hike, if not passed through, amid intense competitive pressure will continue to constrain scalability, pricing power and profitability. Operating performance will remain susceptible to volatility in raw material prices, and offtake by key user sectors.
Susceptibility to downturns in end-user industry: Demand for steel products depends on the construction and infrastructure sectors, which in turn is closely linked to the level of economic activity. Hence, the performance of the RSL remains susceptible to inherent cyclicality in these sectors. Huge fragmentation in the steel industry, marked by low entry barriers, especially in long steel products, has led to intense competition. Operations are also vulnerable to any adverse change in global demand-supply dynamics. |
Liquidity: Adequate Bank limit utilization was moderate with average fund-based limit utilization of around 87% and non-fund-based facility is utilized at 92% for the past 12 months ended March 2025. Net cash accruals are expected to be around Rs 49 Crores in FY 2026 against repayment obligations of Rs 4-6 crores. The company has a cash and cash equivalent total of Rs 11.63 crore. (encumbered FDs of Rs 11 crore) as of March 2025.The current ratio is moderate estimated at 1.39 times on March 31, 2025. The company is expected to realize loans and advances from the group company which will support liquidity. |
Outlook: Stable Crisil Ratings believes RSL will continue to benefit from the extensive experience of its promoter and will be able to maintain its improved business risk in the medium term. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company RSL was established in April 1991 and is based out of Kalol (Panchamahal) based company and is engaged in manufacturing and export of high-quality stainless-steel billet, black bars, and bright bars, Wire Rods etc in various grades and sizes. |
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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