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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 217.90 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 217.90 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs. 217.90 Cr. bank facilities of Bhaskar Steel and Ferro Alloy Private Limited (BSFAPL). The outlook remains 'Stable'.
Rationale for the rating The rating reaffirmation considers the moderation in scale of operations albeit improving profitability margins along with long track record of operations and experienced promoters. Going forward, complete integration is expected to enable the group to reduce its material and power costs, thereby strengthening its profitability margins. The rating also factors in the healthy financial risk profile marked by healthy net worth base, low gearing and healthy debt protection metrics. The adequate liquidity position as reflected in the low utilization in the fund-based bank limits and sufficient cushion in the net cash accruals, further supports the rating. These strengths are however offset by inherent cyclicality in the steel business and the intense competition in the industry, which makes margins and cash flows vulnerable to fluctuations in prices and demand. |
| About the Company |
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Incorporated in 2003, BSFAPL is engaged in the manufacturing of sponge iron & billets with its plant located in Rourkela, Odisha. It was initially promoted by the Maliram Shiva Kumar Group, a Nepalese conglomerate. In October 2010, the company was acquired by the promoters of SRMB Srijan Private Limited as a part of backward integration initiative for the TMT bar business. After running the company for about 10 years, SRMB Srijan Private Limited decided to focus on branding and selling TMT bars and sold the business in September 2021, to Sethia & Agarwal Family of Odisha. BSFAPL currently has an installed manufacturing capacity of 2,14,500 MTPA of Sponge Iron and 1,78,200 MTPA of Billets, supported by a 22 MW captive power plant. The company had undertaken a complete integration of its production operations through the installation of additional induction furnaces for billet manufacturing, along with a Continuous Casting Machine (CCM), which will be linked to the upcoming TMT unit. As of September 2025, the company has completed the entire capex for the billet manufacturing expansion as well as the CCM installation. The next phase of the project involves the commissioning of the TMT Rolling Mill, with a planned capacity of 1,62,000 MTPA, which is expected to commence operations in April 2026. Present directors of the company are Mr. Yashraj Sethia, Mr. Suresh Agarwal, and Mr. Vibhutinand Pathak.
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| About the Group |
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K A I International Private Limited (KAIIPL)
Incorporated in 2007, KAIIPL is engaged in the trading of iron ore fines, coal, steel products such as sponge iron and billets. The current directors of the company are Mr. Suresh Agarwal, Mr. Yashraj Sethia and Natwar Kumar Agarwal. The company based in Orissa. |
| Unsupported Rating |
| Not applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| ACUITE has considered the consolidated financials of Bhaskar Steel and Ferro Alloy Private Limited (BSFAPL) and K A I International Private Limited (KAIIPL). The consolidation is on account of the common management, same line of operations, significant operational and financial fungibility and corporate guarantee of KAIIPL to BSFAPL.
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| Key Rating Drivers |
| Strengths |
| Long track record of operations and experienced promoters
The group has long operational track record in the iron and steel industry for around one and a half decade. Further, the promoters have more than two decades of experience in the field of trading of iron ore and coal products and more than a decade of experience in manufacturing of steel and steel related products. Acuité believes that the long operational track record of the group coupled with the long experience of the management might continue to benefit the group going forward, resulting in steady growth in the scale of operations. Moderation in scale of operations albeit improving profitability margins The operating income of the group stood at Rs. 610.97 Cr. in FY25 as compared to Rs. 1268.80 Cr. in FY24, the growth in FY24 was mainly due to the increase in the orders for export in KAIIPL. However, in FY25 trading significantly declined due to Chinese market slowdown. Further, the group reported revenue of ~Rs.581.67 Cr. till 9MFY26 out of which Rs. 238.42 Cr. is booked by KAIIPL and Rs. 393.44 Cr. is booked by BSFAPL and is expected to close ~Rs.850-900 Cr. in FY26. The operating margin of the group improved to 8.36% in FY25, compared with 4.37% in FY24. The lower margin in FY24 was primarily on account of higher trading activity, which typically carries thinner margins. In FY25, margins strengthened due to a reduction in trading activities, improved manufacturing operations, and benefits derived from the capacity expansion toward a fully integrated plant structure. Further, the operating margin improved to 9.51% in Q3FY26. However, the realisations in BSFAPL have gradually declined over the years, which may exert pressure on margins going forward. This will remain a key monitorable. Going forward, the group is expected to maintain operating margins in the range of ~9–10%. The PAT margin also improved, standing at 4.07% in FY25 as against 2.35% in FY24. Acuité believes that the planned capex and forward integration of the unit are likely to enhance the group’s business risk profile over the medium term. Ongoing capex towards full integration The group is progressing towards full integration, supported by its semi-integrated operations wherein sponge iron produced in house is used for billet manufacturing, while key raw materials are procured internally. The 22 MW captive power plant meets the entire power requirement, resulting in significant savings in power and fuel costs. To achieve full integration, the group has undertaken capex for installing additional induction furnaces, along with a Continuous Casting Machine (CCM) connected to the upcoming TMT unit. This will ensure operational continuity, improve cost efficiency by eliminating billet reheating, and support margin expansion. As of September 2025, the capex related to billet manufacturing and the CCM is fully completed, with the TMT unit expected to commence operations in April 2026. The total project cost of Rs. 76.51 crore—including two furnaces (71,280 MTPA), the CCM, and the TMT unit—is being funded through a Rs. 35 crore term loan, with the balance met through internal accruals and promoter contribution. Healthy financial risk profile The group’s financial risk profile is healthy marked by healthy net worth base, low gearing and healthy debt protection metrics. The tangible net worth of the group increased to Rs.304.00 Cr. as on March 31, 2025, from Rs.286.52 Cr. as on March 31, 2024, due to accretion of profits to reserves. The adjusted net worth stood at Rs. 264.62 crore as on March 31, 2025, compared with Rs. 213.00 crore as on March 31, 2024, factoring in the shareholding structure wherein Yashpari Steel & Mines LLP holds a 92.92 percent equity stake in BSFAPL. As KAIIPL has investments in Yashpari Steel & Mines LLP, these inter-company linkages are considered, and the corresponding net-off adjustments have been applied. Acuite has considered an unsecured loan of Rs.6.03 Cr. as Quasi Equity as management has undertaken to maintain this amount in the business over the medium term. The total debt stood at Rs. 198.90 Cr. as March 31, 2025, as compared to Rs. 168.42 Cr. as on March 31, 2024. Gearing stood low at 0.65 times (Adjusted gearing-0.88 times) as on March 31, 2025, as against 0.59 times (Adjusted gearing-0.79 times) as on March 31, 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.19 times (Adjusted TOL/TNW-1.59) times) as on March 31, 2025, as against 1.09 times (Adjusted TOL/TNW-1.47 times) as on March 31, 2024. Moreover, the debt protection metrics remained healthy marked by Interest Coverage Ratio (ICR) of 4.13 times as on March 31, 2025, as against 5.05 times as on March 31, 2024; and Debt Service Coverage Ratio (DSCR) at 2.05 times as on March 31, 2025, as against 3.04 times as on March 31, 2024. The Net Cash Accruals/Total Debt (NCA/TD) stood at 0.18 times as on March 31, 2025, as against 0.21 times as on March 31, 2024. Acuité believes that going forward the financial risk profile of the group is likely to be sustained despite debt funded capex plan backed by steady accruals. |
| Weaknesses |
| Moderately intensive working capital operations
The group has moderately intensive working capital nature of operations marked by gross current assets (GCA) of 168 days in FY2025 as against 73 days in FY2024 due to high amount of “Other Current Assets” (advances to suppliers) and higher inventory days in FY2025. To fulfil the large number of orders during the end, KAIIPL has paid advances to its suppliers. However, the debtor collection period stood comfortable at 14 days in FY2025 as against 06 days in FY2024. The inventory period stood at 80 days in FY2025 as compared to 29 days in FY2024. The group maintains stock of raw materials of ~2 months to mitigate any fluctuations in the raw material prices. Acuite believes that, the working capital operations of the group would remain moderately intensive over near to medium term owing to expected change in business mix with more focus on manufacturing than trading in the group. Inherent cyclical nature of the steel industry The group's performance remains vulnerable to cyclicality in the steel sector given the close linkage between the demand for steel products and the domestic and global economy. The end-user segments such as real estate, civil construction and engineering also display cyclicality. Further, operating margins are vulnerable to volatility in the input prices (sponge iron, iron ore and coal) as well as realisation from finished goods. The prices and supply of the main raw material, sponge iron, directly impacts the realisations of finished goods. Any significant reduction in the demand and prices adversely impacting the operating margins and cash accruals of the group will remain a key monitorable. |
Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
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| Potential triggers (individual or collective) for a downward rating action: |
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| Liquidity Position |
| Adequate |
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The group has an adequate liquidity position marked by Net Cash Accruals (NCAs) of Rs.35.04 Cr. as on March 31, 2025, as against long term debt repayments of Rs.9.94 Cr. over the same period. Further, the group is expected to generate sufficient net cash accruals of ~Rs. 45-60 Cr. to repay its debt obligation of ~Rs. 10-18 Cr in FY26-27. Moreover, the fund-based bank limit remained moderately utilised at ~50 per cent for last six months ended December 2025 for the group. The cash and bank balance of the group stood at Rs.7.34 Cr. as on March 31, 2025. The current ratio stood moderate at 1.83 times as on March 31, 2025, as against 2.40 times as on March 31, 2025. Acuité believes that the liquidity position of the group is likely to remain adequate backed by the steady accruals.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 610.97 | 1268.80 |
| PAT | Rs. Cr. | 24.86 | 29.86 |
| PAT Margin | (%) | 4.07 | 2.35 |
| Total Debt/Tangible Net Worth | Times | 0.65 | 0.59 |
| PBDIT/Interest | Times | 4.13 | 5.05 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
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None
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| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Trading Entities: https://www.acuite.in/view-rating-criteria-61.htm |
| Note on complexity levels of the rated instrument |
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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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