Rating Rationale
January 31, 2018 | Mumbai
Sahyadri Industries Limited
Ratings upgraded to 'CRISIL BBB-/Positive/CRISIL A3'
Rating Action
Total Bank Loan Facilities Rated Rs.220 Crore
Long Term Rating CRISIL BBB-/Positive (Upgraded from 'CRISIL BB/Stable')
Short Term Rating CRISIL A3 (Upgraded from 'CRISIL A4+')
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has upgraded its ratings on the bank facilities of Sahyadri Industries Limited (SIL) to 'CRISIL BBB-/Positive/CRISIL A3' from 'CRISIL BB+/Stable/CRISIL A4+'.

The upgrade reflects improvement in business risk profile, reflected in substantial rise in operating margin, accrual, and return on capital employed in fiscal 2017 due to streamlining of processes, cost-saving measures adopted by the company, and reduction in raw material prices. The upgrade also factors in improvement in financial risk profile because of better capital structure and debt protection metrics. Liquidity improved due to prepayment of a part of term loans and increase in accrual. 

Analytical Approach

For arriving at the ratings, unsecured loans of Rs 38.95 crores as on March 31, 2017, have been treated as neither debt nor equity as these are expected to remain in business over the medium term and are subordinate to bank debt. 

Key Rating Drivers & Detailed Description
* Established market position in the corrugated asbestos-cement (AC) sheets industry

SIL has been manufacturing AC sheets since 1981 under the Swastik brand. It is present across Maharashtra, Gujarat, Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana (70% of the domestic market for AC sheets). SIL has leadership position in the AC sheets market in Maharashtra; it has two manufacturing facilities in the state, resulting in savings on logistical costs. The proximity of the manufacturing facilities to its markets gives it an added competitive advantage.

* Above-average financial risk profile:
Networth was moderate at Rs 105.5 crore as on March 31, 2017, which is expected to improve over the medium term due to healthy accretion following better operating margin. Gearing was healthy at 0.71 time and total outside liabilities to tangible networth ratio 1.09 times. Debt protection metrics were above average, with interest coverage and total debt to net cash accruals of 2.6 times and 0.22 time, respectively, for fiscal 2017. Moreover, promoters extended unsecured loans of Rs 48.72 crore as on March 31, 2017. SIL prepaid Rs 17 crore of term loans in fiscal 2018 out of its accrual. This, along with no major capital expenditure (capex) over the medium term is likely to keep financial risk profile steady over the medium term.

* Susceptibility to volatility in input prices and foreign exchange (forex) rates, and dependence on monsoon for demand of final product
The company's products have relatively limited value addition due to intense competition. Also, the market for AC sheets is largely rural. Therefore, any variation in rainfall or crop yield could lower the demand for AC sheets and hence intensify competition. One of the main substitute is steel sheets. With sharp decline in prices of sheet in the past, price difference between AC sheet and steel sheets had narrowed further, thereby putting pressure on demand.

Consequently, players have limited ability to pass on incremental input prices (mainly of cement, fly ash, and asbestos) to customers or command a significant premium for their products; hence, margins in the AC sheets industry are vulnerable to input costs. Asbestos is mainly imported from Kazakhstan, Russia, Canada, Zimbabwe, and South Africa, and rupee depreciation has resulted in high input costs. Though the company is able to pass on raw material price increases to customers with a lag, reduced pricing power because of weak demand may affect overall profitability.

* Large working capital requirement
SIL continues to have large working capital requirement as reflected in high gross current assets (GCAs) of 139 days as on March 31, 2017. Its operations have been working capital intensive because of high inventory and debtor days. Though debtor days have remained at about 45 days, inventory days were at 74 days and have reduced from 97 days in fiscal 2016. Other than keeping stock of imported raw materials such as asbestos, year-end inventory also includes finished goods inventory maintained at year-end for key sales season in the first quarter. However, on the supply side, the company received credit and creditors stood at around 67 days as on March 31, 2017. With infusion of funds from promoters during fiscal 2016 and 2017 and improvement in profitability levels in fiscal 2017 and current year, reliance on external debt is gradually reducing.
Outlook: Positive

CRISIL believes SIL will continue to benefit over the medium term from its established market position. The rating may be upgraded if the Company sustains its profitability and scale, while maintaining its financial risk profile, and liquidity. The outlook may be revised to 'Stable' if weakening in cash accrual or working capital cycle affects liquidity, or if adverse changes in Central government regulations regarding use of asbestos or any large debt-funded capex weakens key credit metrics.

About the Company

SIL (formerly, New Sahyadri Industries Ltd) was set by Mr Lalji Bhai Patel in 1994. The company is part of the Swastik group and manufactures AC sheets for roofing purposes, especially in the rural regions. The company also trades in steel doors and sells wind power from its three wind farms with aggregate capacity of 23.2 megawatts. It has five manufacturing facilities, two in Chinchwad and Kedgaon (Maharashtra), and one each in Perundurai (Tamil Nadu), Mahuvej (Gujarat), and Vijayawada (Andhra Pradesh). 

Key Financial Indicators
Particulars Unit 2017 2016
Revenue Rs. Cr. 246.03 341.50
Profit After Tax (PAT) Rs. Cr. 3.18 -10.90
PAT margin % 1.2 -3.1
Adjusted Debt/Adjusted Net worth Times 0.71 1.02
Interest coverage Times 2.65 1.5

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of instrument Date of
Rate (%)
Maturity date Issue
(Rs. Cr)
Rating Assigned
with Outlook
NA Cash Credit NA NA NA 114.15 CRISIL BBB-/Positive
NA Proposed Short Term Bank Loan Facility NA NA NA 15.79 CRISIL A3
NA Term Loan NA NA Mar-2021 90.06 CRISIL BBB-/Positive
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  220  CRISIL BBB-/Positive/ CRISIL A3    No Rating Change    No Rating Change  26-10-16  CRISIL BB/Stable/ CRISIL A4+  28-09-15  CRISIL BB+/Stable/ CRISIL A4+  CRISIL BB+/Stable 
Non Fund-based Bank Facilities  LT/ST    --    --    --    --    --  CRISIL A4+ 
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit 114.15 CRISIL BBB-/Positive Cash Credit 114.15 CRISIL BB/Stable
Proposed Short Term Bank Loan Facility 15.79 CRISIL A3 Proposed Short Term Bank Loan Facility 15.79 CRISIL A4+
Term Loan 90.06 CRISIL BBB-/Positive Term Loan 90.06 CRISIL BB/Stable
Total 220 -- Total 220 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Construction Industry
CRISILs Bank Loan Ratings
CRISILs Criteria for rating short term debt
The Rating Process

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000

Jyoti Parmar
Media Relations
CRISIL Limited
D: +91 22 3342 1835
B: +91 22 3342 3000

Salim Yahoo
Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3031

Aditya Munshi
Associate Director - CRISIL Ratings
CRISIL Limited
D:+91 22 4097 8105

Ruchi Agrawal
Rating Analyst - CRISIL Ratings
CRISIL Limited
B:+91 22 3342 3000
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
For Analytical queries:


Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.

About CRISIL Limited

CRISIL is an agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers.

We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com 


About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.


CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of S&P Global Inc. and its subsidiaries (collectively, the “Company) you may find of interest.

For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view the Company’s Customer Privacy at https://www.spglobal.com/privacy

Last updated: April 2016


This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: http://www.crisil.com/ratings/highlightedpolicy.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL