Press Release July 27, 2026 CAUVERY IRON AND STEEL INDIA LIMITED Rating Assigned

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	90.00	ACUITE BBB | Stable | Assigned	-	RBI
Total Outstanding	0.00	90.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

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 assigned its long-term rating of ‘ACUITÉ BBB' (read as ACUITE triple B) on the Rs. 90.00 Cr. bank facilities of Cauvery Iron and Steel India Limited (CISIL). The outlook is ‘Stable’. Rationale for rating  The assigned rating factors in the company’s long operational track record and experienced management along with company’s steady growth in revenues albeit modest scale of operations while maintaining healthy profitability margins. The rating also considers company’s moderate financial risk profile and adequate liquidity position. However, the rating is constrained by moderately intensive working capital operations, intense competition and inherent cyclicality in the steel industry and susceptibility of profitability to volatility in raw material prices.

About the Company

­Cauvery Iron and Steel India Limited (CISIL), incorporated in 1991, is engaged in the manufacturing and trading of iron and steel products catering to the construction, infrastructure, railway, and other industrial sectors. The company operates its manufacturing facility at Khajapur Village, Medak District, Telangana. CISIL has a semi-integrated steel manufacturing setup comprising of a 99,000 MTPA Sponge Iron Plant, 90,000 MTPA Billet Plant, and 90,000 MTPA TMT Bar Rolling Mill. The integrated nature of its operations enables captive consumption of sponge iron for billet production and billets for TMT bar manufacturing, resulting in operational efficiencies, value addition, and reduced dependence on external suppliers. To support its manufacturing operations, the company operates a 15 MW captive power plant, consisting of 9 MW thermal power generation capacity and 6 MW Waste Heat Recovery Boiler (WHRB)-based power generation capacity. Additionally, company is the process of implementing a 4 MW captive solar power plant. The directors of the company are Mr. Ashok Kumar Gupta, Mr. Bhupesh Gupta, Mrs. Shaloo Gupta, Mr. Shiva Prasad Sharma, and Mr. Anant Agarwal.

Unsupported Rating

­Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Cauvery Iron and Steel India Limited (CISIL) to arrive at this rating.

Key Rating Drivers

Strengths

Experienced management with established track record in steel industry  CISIL benefits from the vast experience of its promoter and management team in the steel industry. The company is led by Mr. Ashok Kumar Gupta, Managing Director, who has over 55 years of experience in steel trading, market development, customer relationship management, and business strategy. He is supported by Mr. Bhupesh Gupta, Executive Director, who has over 20 years of industry experience and oversees the company's finance, business development, and strategic planning functions. The company has also established longstanding relationships with customers and suppliers, with ~25% of its business derived from Shyam Steel Industries Limited, for whom it manufactures products marketed under the  "Shyam Steel" brand, endorsed by Mr. Virat Kohli. Acuite believes that CISIL will continue to benefit from its experienced management and established market presence and relationships with key stakeholders. Steady operating performance and healthy profitability margins CISIL has reported a steady operating performance, with revenue increasing to Rs. 489.42 crore in FY2026 (Prov.) from Rs. 460.78 crore in FY2025 and Rs. 436.15 crore in FY2024, supported by sustained demand for its products. Further, the company reported revenue of Rs. 134 crores in Q1 FY27(Prov.), compared to Rs. 122 crores in Q1 FY26. The product demand remained largely stable, with a marginal increase in volumes offset by a slight decline in realizations. The company's operating profitability marginally improved, with the EBITDA margin rising to 7.19 percent in FY2026(Prov.) from 6.75 percent in FY2025, primarily on account of efficient cost management. Consequently, the PAT margin improved correspondingly to 1.16 percent in FY26 (prov.) as compared to 0.83 percent in FY25. Acuite believes that the company’s scale of operations and profitability margins are expected to improve steadily over the near to medium term, supported by savings in power costs upon commissioning of the captive solar power plant and favourable growth prospects in the steel industry. Moderate financial risk profile  The financial risk profile of CISIL is moderate, marked by a moderate net worth, healthy gearing, and comfortable debt protection metrics. The company's net worth improved to Rs. 138.18 crore as on March 31, 2026(Prov.), from Rs. 92.50 crore as on March 31, 2025, aided by healthy accretion of profits to reserves and the inclusion of Rs. 40.01 crore of unsecured loans as quasi-equity, considering that these promoter/director-infused loans are subordinated to bank borrowings. Consequently, the gearing improved to 0.54 times as on March 31, 2026 (Prov.), from 1.19 times as on March 31, 2025, owing to the treatment of the unsecured loans of Rs. 40.01 crore as quasi-equity. However, there was a marginal increase in working capital borrowings and long-term debt during the year, primarily towards machinery replacement. The total debt stood at Rs. 75.19 crore as on March 31, 2026 (Prov.), comprising long-term bank borrowings of Rs. 12.02 crore, short-term borrowings of Rs. 54.12 crore, unsecured loans from promoters of Rs. 0.01 crore, and current maturities of long-term debt of Rs. 9.05 crore, compared with Rs. 110.43 crore as on March 31, 2025. The debt protection indicators remained comfortable with the interest coverage ratio (ICR) at 3.28 times in FY2026 (Prov.) against 3.06 times in FY2025 and the debt service coverage ratio (DSCR) at 1.46 times against 1.39 times, respectively. Further, the debt-to-EBITDA ratio stood at 2.09 times in FY2026(Prov.) compared to 3.17 times in FY2025 and Total Outside Liabilities/Tangible Net Worth (TOL/TNW) ratio improved to 1.15 times from 2.07 times over the same period. Further, the company is implementing a 4 MW captive solar power project. The project is being funded through a term loan of Rs. 15 crore and rest through own funds. Project is expected to be completed by August 2026. Acuite believes that the financial risk profile of CISIL is expected to remain moderate over the near to medium term supported by the absence of any significant debt-funded capital expenditure plans and steady net cash accruals.

Weaknesses

Moderately intensive working capital operations The working capital operations of CISIL remained moderately intensive, as reflected by Gross Current Assets (GCA) of 141 days as on March 31, 2026(Prov.), compared to 133 days as on March 31, 2025, majorly due to increase in other current assets which mainly includes advances to suppliers. The debtor days stood at 10 days in FY2026(Prov.) as compared to 4 days in FY2025. Inventory days stood at similar levels at 124 days in FY2026(Prov.) as against 128 days in FY2025 and the creditor days stood at 65 days in FY2026(Prov.) as compared to 67 days in FY2025. Further, the fund-based limit utilization stood ~89.77 per cent for Six months ended May 2026. Acuite believes that the working capital operations of the company will remain moderately intensive over the medium term on the back of high inventory holding. Susceptibility of profitability to volatility in raw material prices  The company’s profitability remains highly susceptible to volatility in key raw material prices. Any sharp increase in input costs, coupled with the company’s inability to pass on such increases to customers in a timely manner, may adversely impact operating margins. Acuite believes that the company’s profit margins are likely to remain exposed to the fluctuations in raw material prices.  Intense competition and inherent cyclicality in the steel industry The company is operating in a competitive and fragmented nature of industry due to the presence of many unorganized players on account of low entry barriers. Moreover, demand for its products predominantly depends on the infrastructure and real-estate industry.  Thus, the profit margins and sales of the company remain exposed to inherent cyclicality in these sectors.

Rating Sensitivities

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

-Significant growth in revenues and profitability margins -Improvement in working capital cycle with GCA below 80 days on a sustained basis -Improvement in financial risk profile with debt to EBITDA below 1.5 times on a sustained basis.

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

-Significant decline revenues and profitability -Deterioration in financial risk profile on the back of unexpected debt funded capex or working capital borrowings with debt to equity above 1.5 times and DSCR below 1.2 times -Elongation in working capital cycle.

Liquidity Position

Adequate

The company’s liquidity is adequate marked by sufficient net cash accruals against its repayment debt obligations. The net cash accruals stood at Rs. 23.24 Cr. in FY2026(Prov.) as against long term debt repayment of only Rs. 12.50 Cr. during the same period. Going forward, the company is expected to generate net cash accruals in the range of Rs. 25-27 Crore in FY27-28 against it its repayment obligation of Rs. 9-7 crore during the same period. Further, the fund-based limit utilization stood ~89.77 per cent for Six months ended May 2026.  The current ratio stood at 1.23 times as on March 31, 2026(Prov.). The cash and bank balances of the company stood at Rs. 0.03 Cr. as on March 31, 2026(Prov.). Acuite believes that going forward the liquidity position of the company will remain adequate owing to steady cash accruals.

Outlook: Stable

­

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 26 (Provisional)	FY 25 (Actual)
Operating Income	Rs. Cr.	489.42	460.78
PAT	Rs. Cr.	5.67	3.83
PAT Margin	(%)	1.16	0.83
Total Debt/Tangible Net Worth	Times	0.54	1.19
PBDIT/Interest	Times	3.28	3.06

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

Contacts

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

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