July 25, 2013

Mumbai

Scan Steels Limited

Ratings Suspended

Total Bank Loan Facilities Rated
Rs.1507.1 Million
Long-Term Rating
Suspended
Short-Term Rating
Suspended

(Refer to Annexure 1 for details on facilities)

CRISIL has suspended its ratings on the bank facilities of Scan Steels Limited (Scan Steels). The suspension of ratings is on account of non-cooperation by Scan Steels with CRISIL's efforts to undertake a review of the ratings outstanding. Despite repeated requests by CRISIL, Scan Steels is yet to provide adequate information to enable CRISIL to assess Scan Steels’s ability to service its debt. The suspension reflects CRISIL's inability to maintain a valid rating in the absence of adequate information. CRISIL considers information availability risk as a key credit factor in its rating process and non-sharing of information as a first signal of possible credit distress, as outlined in its criteria ‘Information Availability Risk in Credit Ratings’.

About the Group

Scan Steels, the flagship company of the Scan group, was incorporated in December, 1990 as a private limited company and converted into a public limited company in March 1996. The company, promoted by Mr. Sawarmal Gadodia, is now managed by his sons Mr. Rajesh Gadodia and Mr. Nimish Gadodia. Scan Steel is an integrated steel producer with an installed capacity of 210,000 tonnes per annum (tpa) of sponge iron, 116,000 tpa of ingots/billets, captive thermal power plant of 12 megawatt (MW), and a rolling plant of 58,000 tpa. Scan Steel is setting up a 60,000 tpa sponge iron unit for Rs.350 million and a 10 MW power plant for Rs.600 million; 70 per cent of the cost will be funded by debt and the remainder will be funded by promoters’ contribution.

Annexure 1 Details of various bank facilities

Current facilities
Previous facilities
Facility
Amount
(Mln)
Rating
Facility
Amount (Mln)
Rating
Cash Credit
780
Suspended
Cash Credit
780
CRISIL B/Stable
Letter of Credit
200
Suspended
Letter of Credit
200
CRISIL A4
Term Loan
527.1
Suspended
Term Loan
527.1
CRISIL B/Stable
Total
1507.1
--
Total
1507.1
--

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July 25, 2013

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