Press Release March 27, 2026 S A L Steel Limited Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	250.00	ACUITE BBB+ | Stable | Assigned	-
Total Outstanding	250.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has assigned long term rating of "ACUITE BBB+" (read as ACUITE triple B plus) on the Rs. 250 Cr. bank facilities of SAL Steel Limited. The outlook is "Stable". Rating Rationale The rating has taken into cognizance the acquisition of the company by Sree Metaliks Limited (SML) in September 25 and as of February 2026 with a stake of 57.50 percent. The group has registered revenues of about Rs. 2308.17 Cr. as of February 2026 with slight moderation in operating profitability due to correction in steel prices in FY 26. The standalone revenues of SAL has been at 195 Cr. only in 11MFY26 since plant was in shut down between September 25 to February 26 owing to modification and take over by present management. The financial risk profile continues to remain heathy, low gearing and robust debt protection metrices, efficient working capital cycle and strong liquidity position of the group. At a standalone level also, SAL does not have any major long term debt. However, these strengths are partly offset by intense competition and volatility in steel prices in the market and post acquisition, the operations of SAL will remain a key monitorable.

About Company

Incorporated in 2003 and listed at NSE and BSE, Gujarat based, the company is engaged in manufacturing sponge iron, ferro alloys and power and the products manufactured by the company are sold in the domestic market. The company is generating 40 MW Power from waste Heat recovery Boiler (WHRB) and Fluidized Bed Combustion (FBC) boiler used for captive consumption as well as open market sales. The facilities of the company are located in Gandhidham, Gujarat. The promoters holding and controlling stake has been taken over by the promoters of SML in FY26. Presently, the operations of the company are managed by Mr. Mahesh Kumar Agarwal and Mr. Kaustubh Agarwal.

About the Group

Sree Metaliks Limited Incorporated in 1995, Odisha based- Sree Metaliks Limited, is an integrated steel manufacturing company. The company has iron ore mines in Khandhbandh, Odisha along with three plants in Rugudi, Anra and Angul in Odisha. The operations of the company are managed by Mr. Mahesh Kumar Agarwal. The other directors are Mrs. Nalini Agarwal, Mr. Kaustubh Agarwal, Mr. Sanjiv Saklani, Mr. Kalyan Maity, Mr. Rewatiraman Sharma and Ms. Tuhina Agarwal. The key managerial persons are Mr. Deepak Tulsyan and Mr. Rahul Agarwal.

Unsupported Rating

­Not Applicable

Analytical Approach

Extent of Consolidation

•Full Consolidation

Rationale for Consolidation or Parent / Group / Govt. Support

Acuite has taken a consolidated approach of Sree Metaliks Limited and SAL Steel Limited from FY 26 onwards as the latter has been acquired by Sree Metaliks Limited (present shareholding of 57.70% as of February 2026, further increase to 70.50% in near term), common management, similar line of business and strong financial linkages.

Key Rating Drivers

Strengths

Integrated operations with long track record and benefits derived from experienced promoters The operations of the group are being managed by Mr. Mahesh Kumar Agarwal and Mr. Kaustubh Agarwal. They hold experience in the industry since three decades and has over the years established fully integrated steel plant in Odisha. It manufactures sponge iron, billet, pig iron, iron ore pellets, TMT products. Further the operations are supported by a long term lease for iron ore mines for 50 years with a reserve capacity of 50 million tonnes. The group also has captive power plants which supports its operating efficiency. Post acquisition of SAL Steel Limited, SML have access to ferro chrome and pellets. The group also has long standing relationship with their customers and suppliers and has an established dealer and distribution network. Acuite believes that the experienced promoters and the relationship with the customers and suppliers will benefit the group going forward. Increase in Revenues and operating profitability The revenues of the SML have increased to Rs. 2510.14 Cr. in FY 25 as compared to Rs. 2060.19 Cr. in FY 24 on account of increase in volume sold despite correction in prices of steel during the year. As of February 2026, the group has achieved Rs. 2308.17 Cr. of revenues wherein SML has contributed revenues of Rs. 2112.69 Cr. and SAL has contributed revenues of Rs. 195.48 Cr. only as plant was shut down from September 25 to February 26 on account of refurbishments and take over by current management. The operating profitability of SML has slightly increased to 17.18 percent in FY 25 as compared to 16.48 percent in FY 24 due to better integration and upgradation of facility. Going forward, the profitability margin of the group is expected to be moderate over the medium term. The group has a cumulative ongoing capex plans of general maintenance and expansion of sponge iron of 0.30 MTPA, WHRB of 20MW, palletisation plant of 0.2 MTPA of project cost about Rs. 681 Cr. and to be funded by way of term loan of Rs. 100 Cr. (sanctioned with Axis Bank), equity infusion of Rs. 65 Cr., internal accruals of Rs. 376 Cr. and Unsecured loans of Rs. 140 Cr. to be augmented in phases in the next three years. This is expected to augment the scale of operations of the group going forward and provide further operating efficiencies due to better integration. Healthy financial risk profile The financial risk profile of the SML is marked by improving net worth, low gearing and robust debt protection metrics. The tangible net worth of the group stood at Rs. 1147.14 Cr. as on March 31, 2025 as compared to Rs. 880.73 Cr. as on March 31, 2024 due to accretion to reserves.  On a standalone basis, SAL had a capital structure of networth of Rs. 38.66 Cr. in FY 25. The gearing of the group stood at 0.08 times as on March 31, 2025 as compared to 0.19 times as on March 31, 2024. On a standalone basis, SAL had a gearing of 4.59 times in FY 25. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 0.26 times as on March 31, 2025 as compared to 0.42 times as on March 31, 2024. The debt protection metrices of the company remain robust marked by Interest Coverage ratio of 58.04 times and debt service coverage ratio (DSCR) of 3.05 times for March 31, 2025. On a standalone basis, SAL had Interest Coverage ratio of 1.20 times and Debt service coverage ratio of 1.25 times for FY 25. The net cash accruals to total debt (NCA/TD) stood at 3.52 times as on March 31, 2025 as compared to 1.53 times as on March 31, 2024. Acuité believes that the financial risk profile of the group will remain healthy over the medium term, with steady cash accruals. Efficient Working Capital Cycle The working capital cycle of SML is efficient as reflected by Gross Current Asset (GCA) of 66 days for March 31, 2025 as compared to 90 days for March 31, 2024. On a standalone basis, SAL had GCA days of 123 days for FY 25. The debtor period stood at 15 days as on March 31, 2025 as compared to 20 days as on March 31, 2024. The collection cycle ranges from about 20-25 days. Further, the inventory days of the company stood at 41 days as on March 31, 2025 as compared to 54 days in FY2024. The inventory is kept for 2 months since mining activity slows down during monsoon season. The creditors stood at 18 days as on March 31, 2025 as compared to 23 days as on March 31, 2024. The company follows cash and carry model, very low credit period is extended. Acuité believes that the working capital operations of the group will remain at the similar levels over the medium term, even post acquisition of SAL by SML with modest movement.

Weaknesses

­Intensive competition and inherent cyclicality in the steel industry The company is operating in competitive and fragmented nature of industry especially in primarily in steel producing industry. There are several players who are engaged in sponge iron, billets, and TMT manufacturing business in organised and unorganised sector. The company's performance remains vulnerable to cyclicality in the steel sector as demand for steel depends on performance of end user segments such as construction and real estate. Moreover, the profit margins and sales of the company remains exposed to inherent cyclicality in the steel industry. Ongoing Capex Plans The group has a cumulative ongoing capex plans of general maintenance and expansion of sponge iron of 0.30 MTPA, WHRB of 20MW, palletisation plant of 0.2 MTPA of project cost about Rs 681 Cr. and to be funded by way of term loan of Rs. 100 Cr. (sanctioned with Axis Bank), equity infusion of Rs. 65 Cr., internal accruals of Rs. 376 Cr. and Unsecured loans of Rs. 140 Cr. to be augmented in phases in the next three years. Acuite notes that the timely augmentation of the capex plan in phases over three years would be a key monitorable. Stabilisation risk associated with SAL's Operating performance On the basis of 11MFY 26, SAL has contributed revenues of Rs. 195.48 Cr. only as plant was shut down from September 25 to February 26 on account of refurbishments and take over by current management. Acuite notes that the increase in the existing capacity utilization of SAL and stabilisation of the capex in phases will remain a key monitorable.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Stabilization of SAL steel limited with respect to growth in revenues Timely execution of the ongoing capex  Profitability to remain more than 17-18 percent

Potential triggers (individual or collective) for a downward rating action:

Net cash accruals declining below Rs. 250 Cr. Elongation of working capital cycle

Liquidity Position

Adequate

The group has strong liquidity marked by net cash accruals of Rs 341.98 Cr. as on FY2025 as against long term debt of Rs. 106.87 Cr. over the same period. On a standalone basis, SAL has net cash accruals of Rs. 4.15 Cr. for FY 25. The cash and bank balance stood at Rs. 5.81 Cr. as on March 31, 2025 and Rs. 33.28 Cr. as on March 31, 2024. On a standalone basis, SAL has cash and bank balances of Rs. 0.19 Cr. for FY 25. Further, the current ratio of the company stood at 1.84 times as on March 31, 2025 as compared to 1.85 times as on March 31, 2024. On a standalone basis, SAL has current ratio of 1.18 times for FY 25. The group has capex plans to be funded by internal accruals and debt (sanctioned with Axis Bank). Any cost overrun and its funding pattern will remain a key monitorable. SML has a total OD against lien marked FD limit of Rs. 240 Cr. with Yes bank and ICICI Bank. The average bank limit utilisation of the group is 34% last 6 months ended December 2025. Acuité believes that the liquidity of the group is to remain adequate over the near to medium term on account of steady cash accruals, healthy current ratio and lean working capital cycle.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	2510.14	2060.19
PAT	Rs. Cr.	292.08	218.92
PAT Margin	(%)	11.64	10.63
Total Debt/Tangible Net Worth	Times	0.08	0.19
PBDIT/Interest	Times	58.04	23.31

Key Financials (Standalone)

­*Standalone figures of Sree Metaliks Limited are being reflected for “consolidation key financials” of FY 25 and FY 24 and the impact of consolidated financials will be reflected from FY 26 onwards since acquisition of SAL has occurred in September 25. However, on a standalone basis, the financials of SAL is as below:   Particulars Unit FY 25 Operating Income Rs. Cr 544.12 PAT Rs. Cr -6.42 PAT Margin % -1.18 Total Debt/Tangible Net Worth Times 4.59 PBDIT/Interest Times 1.20

Status of non-cooperation with previous CRA (if applicable)

­None

Any Other Information

­None

Applicable Criteria

• 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

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History:Not Applicable

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 250.00 Simple ACUITE BBB+ | Stable | Assigned

*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

­ Sr No. Company Name 1 Sree Metaliks Limited 2 S A L Steel Limited

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Vedika Lahoti Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.