Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuite has reaffirmed its long-term rating of 'ACUITE BB' (read as ACUITE double B) on the Rs.32.00 Cr. bank facilities of K R Associates. The outlook is 'Stable'.
Acuite has assigned its long-term rating of 'ACUITE BB' (read as ACUITE double B) on the Rs.14.96 Cr. bank facilities of K R Associates. The outlook is 'Stable'.
Rationale for rating
The rating reaffirmation factors in the extensive experience of the partners, with over two and a half decades of presence in the cement industry. The rating also draws comfort from the firm’s steady business risk profile over the years, albeit with a moderation in revenue to Rs. 113.28 Cr. in FY25 from Rs. 129.19 Cr. in FY24, primarily on account of lower demand in the North-Eastern region. However, operating margins improved to 11.44 percent in FY25 from 8.68 percent in FY24, supported by a reduction in raw material costs. The rating further factors in the firm’s efficient working capital cycle, reflected by GCA days of 60 days driven by strong collection efficiency and controlled inventory levels. However, the rating remains constrained by the average financial risk profile, marked by a gearing of 1.88 times in FY25, stretched liquidity, and susceptibility of profit margins to volatility in input costs.
About the Company
Established in 2009, K R Associates (KRA), an Assam based firm is engaged in the manufacturing of cement and clinker. The firm has commenced production of cement in November’19 with manufacturing capacity of 400 TPD and have been manufacturing cement for Amrit Cement Ltd on job work basis until FY2023. Subsequently, the firm has set up its own clinker division with manufacturing capacity of 300 TPD with commercial production starting from June’22 to avail the synergy benefits of grinding and manufacturing its own cement. The firm currently manufactures and market the cement under the Brand Name “Galaxy Cement”.
Unsupported Rating
Not applicable
Analytical Approach
Acuite has considered the standalone business and financial risk profile of KRA to arrive at the rating.
Key Rating Drivers
Strengths
Experienced partners
One of the partners, Mr. Deepak Kayal has more than two and a half decades of experience in the cement industry. The other partners of firms have varied experience and have been running successful business in diversified portfolio. The same has led to developing healthy relationship with both customers and suppliers. Acuite believes that the experience of the partners would support the business risk profile in near to medium term.
Improvement in profitability, albeit decline in revenue
The firm reported revenues of Rs. 113.28 Cr. in FY25 as against Rs. 129.19 Cr. in FY24, with the decline primarily driven by lower sales volumes owing to subdued demand in the North-Eastern region. However, despite the revenue moderation, the firm’s profitability improved, supported by a reduction in raw material prices. The operating margin increased to 11.44 percent in FY25 from 8.68 percent in FY24, while the PAT margin improved to 2.49 percent in FY25 from 1.41 percent in FY24. The firm has achieved revenues of Rs. 115.15 Cr. during April 2025 to February 2026. Acuité believes that the revenue is expected to improve over the near to medium term.
Efficient working capital management
The firm has efficient working capital requirements as evident from GCA days of 60 days in FY2025 as compared to 56 days in FY2024. Debtor days stood at 29 days in FY2025 as against 19 days in FY2024. Inventory days stood at 10 days in FY2025 against 18 days in FY2024 and creditor days stood at 37 days in FY 2025 against 32 days in FY 2024. Acuité believes that going forward the working capital operations of the firm will remain same in near to medium term.
Weaknesses
Average financial risk profile
The firm’s financial risk profile remains average, marked by a moderate net worth base, high gearing, and comfortable debt protection metrics. The tangible net worth stood at Rs. 18.01 Cr. as on March 31, 2025, as against Rs. 17.07 Cr. as on March 31, 2024, supported by profit accretion, though partially offset by capital withdrawal by the partners. The gearing stood high at 1.88 times as on March 31, 2025, improving from 2.50 times in the previous year. Debt protection metrics, however, remain comfortable, with an interest coverage ratio of 4.05 times in FY25 (3.37 times in FY24) and a debt service coverage ratio of 1.35 times in FY25 (1.26 times in FY24). In FY26, the firm has availed a working capital term loan of Rs. 25 Cr., repayable from April 2026 to March 2033. Acuité believes that the firm’s financial risk profile is likely to remain at similar levels over the near to medium term.
Risk of capital withdrawal
K R Associates constitution as a partnership firm is exposed to discrete risks, including the possibility of withdrawal of capital by the partners. The same has been witnessed in FY 25 when capital withdrawal led to decline in partner's capital to Rs. 18.01 Cr. from Rs. 19.55 Cr. in FY24. Moreover, the partnership nature partially limits the flexibility to raise the funds vis-a-vis a limited company. Acuité believes that any substantial withdrawal of capital by the partners is likely to have an adverse impact on the capital structure.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Growth in operating income by more than 30%.
Improvement in capital structure.
Potential triggers (individual or collective) for a downward rating action:
Any large debt-funded capex, impacting the financial risk profile and liquidity
Revenue falling by 20-25 percent and steep decline in profitability
Liquidity Position
Stretched
The firm’s liquidity position remains stretched, marked by a low current ratio of 0.71 times as on March 31, 2025. The fund-based working capital limits also remained highly utilised at an average of 90.99 percent for the six months ended March 2026. The firm generated net cash accruals of Rs. 9.73 crore in FY25 against current maturities of long-term debt of Rs. 6.38 crore for the same period. The cash and bank balance stood at Rs. 0.12 crore as on March 31, 2025.Acuité believes that going forward the firm is likely to have stretched liquidity position in the near to medium term on account of high reliance on bank funding for working capital requirements, low current ratio, capital withdrawal albeit steady accruals and absence of debt funded capex plans.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
113.28
129.19
PAT
Rs. Cr.
2.82
1.83
PAT Margin
(%)
2.49
1.41
Total Debt/Tangible Net Worth
Times
1.88
2.50
PBDIT/Interest
Times
4.05
3.37
Status of non-cooperation with previous CRA (if applicable)
North Eastern Development Finance Corporation Ltd.
Not avl. / Not appl.
Term Loan
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
01 Mar 2030
11.53
Simple
ACUITE BB | Stable | Reaffirmed
North Eastern Development Finance Corporation Ltd.
Not avl. / Not appl.
Term Loan
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
01 Sep 2026
1.33
Simple
ACUITE BB | Stable | Reaffirmed
North Eastern Development Finance Corporation Ltd.
Not avl. / Not appl.
Working Capital Term Loan
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
01 Mar 2033
9.74
Simple
ACUITE BB | Stable | Reaffirmed
North Eastern Development Finance Corporation Ltd.
Not avl. / Not appl.
Working Capital Term Loan
Unlisted
RBI
Not avl. / Not appl.
Not avl. / Not appl.
01 Mar 2033
14.96
Simple
ACUITE BB | Stable | Assigned
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
