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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 3.50 | ACUITE C | Downgraded | - |
Bank Loan Ratings | 15.00 | ACUITE D | Downgraded | - |
Bank Loan Ratings | 8.50 | - | ACUITE A4 | Downgraded |
Total Outstanding | 27.00 | - | - |
Total Withdrawn | 0.00 | - | - |
Rating Rationale |
Acuité has downgraded its long-term rating to 'ACUITE D' (read as ACUITE D) from 'ACUITE BBB'(read as ACUITE triple B) on Rs.15.00 Cr. bank facilities of Agrasen Sponge private Limited (ASPL). Acuité has also downgraded its long-term rating to 'ACUITE C' (read as ACUITE C) from 'ACUITE BBB'(read as ACUITE triple B) on Rs. 3.50 Cr. bank facilities and short-term rating to 'ACUITE A4' (read as ACUITE A four) from ‘ACUITE A3+' (read as ACUITE A three plus) on Rs. 8.50 Cr. bank facilities of Agrasen Sponge private Limited (ASPL).
Rationale for Downgrade The rating downgrade is on account of continuous overdrawing’s in the cash credit account by the company in the recent past as per written confirmation received from the banker. |
About the Company |
Incorporated in 2003, Agrasen Sponge Private Limited (ASPL) is an Odisha based company promoted by Mr. Raj Kumar Dadhich and Mr. Murari Lal Sharma. The company undertakes manufacturing of sponge iron with an installed capacity of 60,000 MTPA. Its manufacturing facility is in the Sundargarh district of Odisha. To diversify the business, the company got the manganese ore mines from Government of Odisha on 50 years lease basis since April 2020. The mine is located at Katasahi, Keonjhar district of Odisha.
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Unsupported Rating |
Not applicable
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Analytical Approach |
Acuité has taken a standalone view of the business and financial risk profile of ASPL to arrive at the rating.
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Key Rating Drivers |
Strengths |
Established track record and extensive experience of promoters
The company has a long operational track record in the manufacture of sponge iron for around two decades. Further, the promoters of the company including Mr. Raj Kumar Dadhich and Mr. Murari Lal Sharma have more than one and a half decades of experience in the iron and steel industry. The company has been able to maintain healthy relationship with both its customers and suppliers. Acuité believes that the long operational track record of the company coupled with the extensive experience of the management will continue to benefit the company going forward, resulting in steady growth in the scale of operations. |
Weaknesses |
Instance of delays in servicing of debt obligation
There have been delays in the servicing of debt obligations by the company in the recent past as per written confirmation received from the banker. The sanctioned cash credit (CC) limit was Rs. 15.00 crore and an ad hoc limit of Rs. 3.75 crore was granted from 09/10/2024 to 12/12/2024. However, this ad hoc limit was overdrawn for consecutive period of 39 days i.e. till 20/01/2025 as confirmed by the banker and reflected in the bank statements. |
Rating Sensitivities |
Timely servicing of debt obligations
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Liquidity Position |
Poor |
Liquidity position of the company is poor as there have been instances of delays in servicing of debt obligations in recent past.
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Outlook: Not Applicable |
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Other Factors affecting Rating |
None
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Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
Operating Income | Rs. Cr. | 179.80 | 158.40 |
PAT | Rs. Cr. | 23.47 | 20.85 |
PAT Margin | (%) | 13.06 | 13.16 |
Total Debt/Tangible Net Worth | Times | 0.17 | 0.29 |
PBDIT/Interest | Times | 16.99 | 17.93 |
Status of non-cooperation with previous CRA (if applicable) |
Not applicable
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Any other information |
None
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Applicable Criteria |
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
Note on complexity levels of the rated instrument |
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Contacts |
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