| Synergy Green Industries Limited | ||||
| Rating upgraded to 'Crisil BBB/Stable'; Rated amount enhanced for Bank Debt | ||||
| 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 upgraded its rating on the long-term bank loan facilities and fixed deposits of Synergy Green Industries Ltd (Synergy) to ‘Crisil BBB/Stable’ from ‘Crisil BBB-/Stable’.
The rating upgrade reflects the improvement in the company’s credit profile which is expected to sustain over the medium term. The operating income grew to Rs 362 crore in fiscal 2025 from Rs 326 crore the previous fiscal, driven by volume growth resulting from higher demand from customers. The revenue growth is expected to sustain over the medium term aided by capacity addition and stable demand. The operating margin improved to 14.56% in fiscal 2025 from 12.17% in fiscal 2024, due to improved operational efficiency, stable raw material costs and higher export revenue. With captive solar power and capital expenditure (capex) for in-house machining underway, the operating margin is expected to improve over the medium term. However, the impact of US tariff on profitability will remain monitorable.
The financial risk profile also improved, with increase in networth following a rights issue in fiscal 2025 leading to a better capital structure. Despite ongoing debt-funded capex, the financial risk profile is expected to remain comfortable with heathy accretion to reserve over the medium term.
The rating continues to reflect the extensive experience of the promoters of Synergy in manufacturing heavy iron castings, its established clientele and comfortable financial risk profile. These strengths are partially offset by working capital-intensive operations and susceptibility of operating profitability to volatility in raw material prices. |
Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of Synergy.
Crisil Ratings has treated preference shares worth Rs 10.71 crore as on March 31, 2025, as debt because the shares are expected to be repaid over the medium term.
Unsecured loan of Rs 6.38 crore as on March 31, 2025, from the promoters is treated as debt. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoters: The promoters’ experience of more than a decade in the industrial machinery and consumables industry and healthy relationships with customers should continue to support the business. Synergy was established as a greenfield project, and the promoters have quickly ramped up operations. The promoters have also extended fund support in the form of preference shares and deposits.
Established clientele leading to healthy revenue growth: Revenue rose ~11% on-year to Rs 362 crore in fiscal 2025 on account of increased demand from established clients, including Vestas Nacelles America Inc, Vesta Wind Technologies India Pvt Ltd and Adani New Industries Ltd. Order book of Rs 435 crore provides revenue visibility. The company is focusing on products for high-capacity wind energy generators (of more than 4 MW) and capacity expansion is expected to boost revenue and profitability over the medium term.
Comfortable financial risk profile: The financial risk profile remained comfortable with networth rising to Rs 104 crore as on March 31, 2025, from Rs 46 crore a year earlier due to rights issue of shares at premium and improved profitability. The gearing and total outside liabilities to adjusted networth (TOLANW) ratio improved to 1.5 times and 2.25 times, respectively, as on March 31, 2025, from 1.72 times and 3.25 times, respectively, a year earlier. Debt protection metrics remain comfortable with interest coverage of 3.44 times in fiscal 2025 as against 3.01 times in fiscal 2024. Despite the ongoing debt-funded capex to augment capacity, the financial risk profile is expected to remain comfortable with improving profitability and better accretion to reserve.
Weaknesses: Susceptibility to fluctuations in raw material prices: The operating margin remains susceptible to fluctuations in input prices and ranged from 9.11% to 14.56% in the three fiscals through 2025. Raw materials account for 50-60% of sales, and the prices of key raw materials, such as cold-rolled close annealed scrap, mild steel scrap, pig iron, and resins, are volatile. The company has been able to pass on the price rise to customers only after a lag of 1-2 quarters. Though the operating margin improved in fiscal 2025, its sustenance remains critical and will be monitored over the medium term.
Large working capital requirement: Gross current assets (GCAs) were sizeable at 178 days as on March 31, 2025, driven by receivables and inventory of 58 and 63 days, respectively. A large part of the working capital requirement is funded through credit from suppliers. Efficient working capital management will be monitorable. |
Liquidity: Adequate Bank limit utilisation was at 76% on average for the 12 months through April 2025. Annual cash accrual is expected over Rs 34 crore against term debt obligation of Rs 10.5-12.5 crore per year over the medium term. The current ratio and cash and bank balances stood at 1.03 times and Rs 54 crore, respectively, as on March 31, 2025. |
Outlook: Stable Crisil Ratings believes Synergy will continue to benefit from the extensive experience of its promoters and its established clientele |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company Incorporated in October 2010 and based in Kolhapur, Maharashtra, Synergy primarily manufactures iron castings for wind turbines. Mr Sachin Shirgaokar and Mr V Srinivas Reddy manage the operations. The company is listed on both, the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). |
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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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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