| Shankara Building Products Limited | ||||||
| Long-term rating continues on 'Watch Developing'; Short-term rating reaffirmed | ||||||
| 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 continued its rating on the long-term bank facilities of Shankara Building Products Limited (SBPL) on 'Rating Watch with Developing Implications'; the short-term rating and commercial paper has been reaffirmed at 'Crisil A2'.
Crisil ratings placed the long-term rating on watch developing on December 28 2023 on account of corporate announcement that SBPL had decided to demerge its trading and manufacturing verticals and the effective date of demerger will be April 01, 2024.The trading vertical is expected to be hived off to a new listed entity and manufacturing division is expected to remain in SBPL. The shareholder approval for the demerger was granted on meeting dated February 12 2024 and the process is expected to be completed by H1FY26.
The ratings continue to factor in SBPL’s established market position and extensive experience of the promoter in the building material distribution and retailing businesses, the diversified product offerings, longstanding association with vendors, and moderate financial risk profile. These strengths are partially offset by susceptibility to economic cycles and sharp variation in raw material prices. |
Analytical Approach For arriving at the ratings, Crisil Ratings has combined the financial and business risk profiles of Shankara Building Products Ltd (Shankara) and its wholly owned subsidiaries, Taurus Value Steel & Pipes Pvt Ltd (Taurus), Vishal Precision Steel Tubes & Strips Pvt Ltd (Vishal), and Centurywells Roofing India Pvt Ltd (Centurywells). This is because all these entities, collectively referred to as the Shankara Buildpro group, have a common management, and strong operational and financial links. Crisil Rating has applied parent notch up framework to factor in the support available to the subsidiaries from its parent Shankara.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Adequate Bank limit utilisation is at around 55 percent for the past twelve months ended December 2024. The group mainly depends on non-fund-based facilities for its working capital needs. Cash accruals are expected to be over Rs 120 crore against repayment obligation of Rs 9-12 crore over the medium term.Current ratio is healthy at 1.67 times on March 31, 2024. The group mainly depends on non-fund-based facilities for its working capital needs |
Rating sensitivity factors Upward factors:
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About the Company SBPL Incorporated in 1995 as Shankara Pipes India Pvt Ltd, the company was renamed as Shankara Infrastructure Materials Ltd in 2011, and thereafter, as Shankara Building Products Limited in 2016. Promoted by Mr Sukumar Srinivas, the group operates over 90 retail showrooms in southern and western India, where it sells building and home improvement products for many renowned brands. Further, the group operates in-house pipe and colour-coated roofing sheet processing facilities through wholly owned subsidiaries: Taurus, Vishal, and Centurywells. Shankara Building Products Limited got listed on BSE/NSE in 2017 and promoters hold 52.19% stake in the company as on March 31, 2024 |
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)
& - Fully interchangeable with non fund based limits
$ - Rs 40 crore interchangeable with Non fund based limits
! - Rs 50 crore interchangeable with non fund based limits
< - Rs 25 crore interchangeable with fund based limits
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Annexure – List of entities consolidated
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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