Press Release December 06, 2024 ALCAST SYNERGIES PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	47.90	ACUITE BB | Stable | Assigned	-
Bank Loan Ratings	0.10	-	ACUITE A4+ | Assigned
Total Outstanding	48.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has assigned its long-term rating to 'ACUITE BB' (read as ACUITE Double B) and its short-term rating to 'ACUITE A4+' (read as ACUITE A four plus) on the bank facilities of Rs. 48 Crore of Alcast Synergies Private Limited (ASPL). The outlook is 'Stable'. Rationale for rating The rating assigned reflects established track record of the management in the same line of industry. Since the commercial production started in June 2023, the rating gets comfort from healthy order book, improving scale of operations & profitability and moderate financial risk profile. However, rating is constraint due to intensive working capital operations and stretched liquidity profile of the company.

About the Company

Ludhiana based, Alcast Synergies Private Limited (ASPL) incorporated in March 2023, the company is into the manufacturing of a wide range of aluminium extrusions profiles and premium aluminium alloy ingots. The production started from June 2023. With in-house die manufacturing capability, the company also has the ability to provide customised products for their clients. The company is managed by the directors of the company, Mr. Rishipal Sood and Mr. Viprender Aggarwal.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuite has taken standalone financial and business risk profile of Alcast Synergies Private Limited to arrive at this rating

Key Rating Drivers

Strengths

­Experienced Management The promotors of the company have rich experience in same lime of industry managing other companies as M/s SV Alloys and Shri Vignesh Alloys Private Limited (SVAPL) which are into trading of aluminium scrap. The company boasts an extensive Die Library with over 6000 dies, supporting the production of more than 3000 profiles, and a range of aluminium alloys from the 1xxx to 7xxx series. With in-house die manufacturing capability, the company also has the ability to provide customised products for their clients. Acuite believes that with the experienced management, the company will be able to acquire new clients in near future. The company has a healthy order book worth Rs. 112 Cr. as on 30th September 2024. Scale of Operations & profitability As FY 23-24, the first year of commercial production, the company has recorded the turnover of Rs. 97.27 Cr. with EBIDTA of Rs. 1.66 Cr. The net profit of the company is Rs. 0.36 Cr. with the margin of 0.37% for FY 23-24. The company has already booked revenue of Rs. 54 Cr. as of 30th September 2024 with operational profit of Rs. 2.87 Cr. and net profit of Rs. 0.59 Cr. The increase in the operational profit in 6M FY 24-25 is mainly due to better price realization. Acuite believes that the operations & profitability of the company will improve with better realizations in near future. Financial Risk Profile The company’s financial risk profile is moderate marked by net worth, gearing and debt protection metrics. The tangible net worth of the company stood at Rs. 20.49 Cr. as on March 31, 2024, due to accretion of profits into reserves and treatment of unsecured loans from promoters to quasi equity which amounting to Rs. 19.48 Cr. The adjusted gearing of the company (after treating unsecured loan as quasi equity) stood at 1.23 times as on March 31, 2024. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.56 times as on March 31, 2024. The debt protection metrics of the company is marked by ISCR at 1.36 times and DSCR at 1.33 times as on March 31, 2024. The ROCE of the company is 7.02% in FY 24. Acuité believes that going forward the financial risk profile of the company will improve backed by steady accruals.

Weaknesses

­Working Capital Operations The working capital operations of the company is intensive marked by high Gross Current Assets (GCA) of 144 days for FY 23-24. This is mainly due to inventory holding i.e. 69 days for FY 23-24. As per management, it is common to hold the inventory for two -three months in this line of industry. The debtor days are as 56 days for FY 23-24. As on 30th September 2024, the outstanding debtors is Rs. 22.82 Cr. and all outstanding are below 30 days as per management. Despite having 56 days as debtor days, the company is timely repaying to all the creditors i.e. 24 days. Acuite believes that working capital operations will remain at a same level due to nature of business. Fragmented industry characterized by intense competition and vulnerability to changes in commodity prices The company works in a highly competitive and fragmented segment of the Indian aluminium market, which is characterised by the existence of numerous small, unorganised players. As a result, the industry's players have little pricing power and are subject to pressure from the competition to increase their profitability. Aside from this, its products, which are mostly used by intermediaries, are exposed to the risks linked to industry cyclicality and pricing volatility. The susceptibility of the margins to changes in the raw materials price is inherent in this industry.

Rating Sensitivities

­Scale of operations & profitability Movement in debt protection metrices Working capital operations.

Liquidity Position

Stretched

­The company has stretched liquidity marked by generating net cash accruals of Rs. 0.41 Cr. in FY 23-24 against the absence debt obligations for the same year. The company has a cash & bank balance of Rs. 0.53 Cr. as on 31st March 2024. The current ratio of the company is 1.50 times for FY 23-24. The average fund-based limits for last six months ended October 2024 is 93.31%. Acuite believes that the liquidity of the company is expected to improve as the company is expecting to generate steady cash accruals in over the medium term indicating availability of funds in near future.

Outlook: Stable

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Other Factors affecting Rating

­None.

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	97.27	0.00
PAT	Rs. Cr.	0.36	0.00
PAT Margin	(%)	0.37	0.00
Total Debt/Tangible Net Worth	Times	1.23	0.00
PBDIT/Interest	Times	1.36	0.00

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

­None

Any other information

­None.

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

­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.

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Union Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 38.00 Simple ACUITE BB | Stable | Assigned Union Bank of India Not avl. / Not appl. Forward Contracts Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.10 Simple ACUITE A4+ | Assigned Union Bank of India Not avl. / Not appl. Term Loan 05 Aug 2023 Not avl. / Not appl. 04 Aug 2025 3.94 Simple ACUITE BB | Stable | Assigned Union Bank of India Not avl. / Not appl. Term Loan 05 Aug 2023 Not avl. / Not appl. 04 Aug 2025 5.96 Simple ACUITE BB | Stable | Assigned

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Contacts

Mohit Jain Senior Vice President - Rating Operations Kartik Arora 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.