Detailed Rationale Due to inadequate information and in line with the Securities and Exchange Board of India guidelines, Crisil Ratings had migrated its ratings on the bank facilities of Samrat Forgings Limited (SFL) to 'Crisil BB/Stable/Crisil A4+ Issuer Not Cooperating'. However, the company’s management has subsequently started sharing the information necessary for a comprehensive review of the ratings. Consequently, Crisil Ratings is migrating the ratings to 'Crisil BB/Stable/Crisil A4+'. Crisil Ratings has also withdrawn the ratings at the request of the company and on receipt of a 'no objection certificate' from the banker. This is in line with the Crisil Ratings policy on withdrawal of bank loan ratings.
The ratings continue to reflect the extensive experience of the promoter in the auto component industry. This strength is partially offset by the average financial risk profile and large working capital requirement. |
Analytical Approach Unsecured loan of Rs 5.40 crore, extended by the promoters as on March 31, 2025, has been treated as neither debt nor equity as the loan is subordinated to bank debt, and expected to remain in the business over the medium term. |
Key Rating Drivers - Strengths Extensive experience of the promoter: The three-decade-long experience of the promoter in the auto component industry and his healthy relationships with customers will continue to support the business. The diversified product offerings and strong procurement network shall further aid growth. Revenue has grown to Rs 191 crore in fiscal 2025, from Rs 162 crore in fiscal 2024, and is projected at Rs 205-215 crore in fiscal 2026. The company has booked a revenue of Rs 51.56 crore till June 2025 and is expected to achieve Rs 200 crore in fiscal 2026 on account of incremental demand from existing customers and addition of new customers in both domestic and export markets. |
Key Rating Drivers - Weaknesses Average financial risk profile: High reliance on external debt constrains the financial risk profile. Networth was around Rs 36.83 crore as on March 31, 2025 (as against Rs 31.57 crore a year earlier) while gearing was high at 2.21 times (2.29 times). Debt protection metrics were weak, as reflected in estimated interest coverage and net cash accrual to adjusted debt ratios of 2.50 times and 0.11 time, respectively, in fiscal 2025. (2.24 times and 0.09 time, respectively, in fiscal 2024), which are further expected to remain in line at 2.45-2.50 times and 0.13-0.15 time, respectively, in fiscal 2026.
Large working capital requirement: Gross current assets stood at 162 days as on March 31, 2025. driven by inventory of 124 days and receivables of 46 days. However, payables of around 100 days supported the working capital cycle. The working capital cycle is expected to remain in the same range in fiscal 2026 as well. |
Expected cash accrual of Rs 9-13 crore per annum will sufficiently cover yearly debt of Rs 6.0-6.5 crore over the medium term. However, the bank limits remain utilised around 95% leaving limited cushion in the working capital limits. Owing to the high working capital requirement of the company further increase in the repayment or increasing bank limit utilisation will remain monitorable
The current ratio stood at 0.99 time as on March 31, 2025. |
Outlook: Stable SFL will continue to benefit from its established position in the domestic auto components industry. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 1981, SFL undertakes closed-die forging and machining for components such as spindles, crank shafts, connecting rods, bull gears and crown wheels. Mr Rakesh Mohan Kumar is the managing director. |
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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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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Criteria Details
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