Press Release March 13, 2025 DWARAKA IRON INDUSTRIES PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	75.00	ACUITE BBB- | Stable | Assigned	-
Bank Loan Ratings	25.00	-	ACUITE A3+ | Assigned
Total Outstanding	100.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has assigned its long-term rating of 'ACUITE BBB-' (read as ACUITE triple B minus) and short term rating to 'ACUITE A3+' (read as ACUITE A three plus) on the Rs.100.00 Cr. bank facilities of Dwaraka Iron Industries Private Limited. The Outlook is 'Stable'. Rationale for Rating The rating assigned reflects the established track record of operations and the extensive industry experience of the group’s chief promotor in the same line of industry for more than three decades. The rating also factors in the improving scale of operations, moderate financial risk profile, and adequate liquidity profile of the group. However, the working capital operations are moderately intensive reflected by GCA days which stood at 107 days in FY24 against 95 days in FY23. Also, the inherent cyclicality of the steel business and vulnerability in the margins due to fluctuations in the raw material prices of the company constrains the rating.

About the Company

Incorporated in the year 2020, Dwaraka Iron Industries Private Limited (DIIPL) was formed with the objective to manufacture TMT Bars under the brand name of Dwaraka TMT with the network of more than 300 retailers in Telangana, Maharashtra, Karnataka. The installed capacity of the TMT plant is 1,92,000 MT as on 31st March 2024. Mr. Miryala Ravinder Reddy holds 98.33% stake and balance with his wife Mrs. M Navya Reddy.

About the Group

Srinivasa Steel Traders (SST) It is a proprietorship concern established in 1995 having outlet in Bagh Lingam ally, Telangana does wholesale trading business of TMT bars to almost 300 retailers around the central Hyderabad and as well Surrounding Districts. Mr. Miryala Ravinder Reddy is the proprietor of the firm Dwaraka Ispat Private Limited (DIPL) Incorporated in year 2016, with main objective is to trade into TMT Bars & Cement in the western part of Hyderabad. This company is into wholesale trading of TMT Bars / Billets which it purchases from various secondary steel producers in Telangana and Chhattisgarh and trades Ultratech Cement through various retail outlets. Mr. Miryala Ravinder Reddy holds 83% stake and balance with his wife Mrs. M Navya Reddy.

Unsupported Rating

­Not applicable.

Analytical Approach

Extent of Consolidation

•Full Consolidation

Rationale for Consolidation or Parent / Group / Govt. Support

­Acuite has consolidated the business & financial risk profile of Dwaraka Iron Industries Private Limited, Dwaraka Ispat Private Limited and Srinivasa Steel Traders together referred as Dwaraka Group. The consolidation is in the view of common management, strong operational linkages between the entities and a similar line of business.

Key Rating Drivers

Strengths

­Experienced Management The group is entirely managed by Mr. Miryala Ravinder Reddy as managing director and Chief Promoter of Dwaraka Group having experience of more than three decades in same line of industry. Wherein the group is mainly into manufacturing and trading of TMT Bars under the brand name ‘Dwaraka'. Acuité believes that the long operational track record of the group coupled with the extensive experience of the management will continue to benefit the group going forward, resulting in steady growth in the scale of operations. Improved scale of operations albeit declining profitability The revenue from the operations of the group has improved by 8.07%, thereby increasing the topline from Rs.662.98 Cr. in FY 2023 to Rs. 716.46 Cr. in FY 2024. The group has sold more volume units in FY2024 as compared to previous year albeit decline in the average realisation price. The operating profit of the group declined from Rs. 18.30 Cr. in FY 23 to Rs. 16.83 Cr. in FY 24. The operating margin of the group stood at 2.35% in FY 24 against 2.76% in FY 23. The Net profit of the group declined from Rs. 9.69 Cr. in FY 23 to Rs. 5.64 Cr. in FY 24. The decline is mainly due to high interest cost of utilised working capital limits for FY 24. Acuite believes that going forward, the group will be able to improve scale of operations & profitability in near to medium term on the account of better price realizations. Moderate Financial Risk Profile The group’s financial risk profile is moderate as marked by net worth, gearing and debt protection metrices. The tangible net worth of the group improved & stood at Rs. 49.92 Cr. as on March 31, 2024, against Rs. 33.80 Cr. as on March 31, 2023. This was mainly due to accumulation of profits into reserves and infusion of funds by promoters in the form of equity share capital & share premium to the tune of Rs.10.48 Cr. The Gearing ratio of the group improved and stood at 2.03 times as on March 31, 2024, as against 2.69 times as on March 31, 2023. The gearing ratio is high, however entirely due to short term debt (CC) and unsecured loans infused by the promoters. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) improved and stood at 3.64 times as on March 31, 2024, as against 4.79 times as on March 31, 2023. The debt protection metrics of the group is marked by ISCR at 1.90 times and DSCR at 1.72 times as on March 31, 2024. The ROCE of the group is 11.69% in FY 24. Acuité believes that going forward the financial risk profile of the group will remain at same level backed by steady accruals and absence of debt funded capex in near term.

Weaknesses

Moderately intensive working capital operations The working capital operations of the group is moderate marked by Gross Current Assets (GCA) of 107 days for FY 23-24 against 95 days for FY 22-23. The inventory holding and debtor days stood at 21 & 82 days respectively. Despite having high debtor days, the group is repaying to creditors within 29 days indicates managing working capital cycle efficiently. Acuite believes the working capital operations of the group will remain at same level in near to medium term due to nature of operations. ­Susceptibility to volatility in raw material prices and cyclicality inherent in the steel industry The group's performance remains vulnerable to cyclicality in the steel sector given the close linkage between the demand for steel products and the domestic and global economies. The end-user segments such as real estate, civil construction, and engineering also display cyclicality. The steel industry issensitive to the shifting business cycles, including changes in the general economy and seasonal changes in the demand and supply conditions in the market. The prices and supply of the main raw material, sponge iron, directly impact the realisation of finished goods. Any significant reduction in demand and prices adversely impacting the operating margins and cash accruals of the group will remain a keymonitorable.

Rating Sensitivities

Movement in scale of operations and profitability margins Elongation of working capital cycle

Liquidity Position

Adequate

The liquidity profile of the group is adequate marked by generating net cash accruals of Rs. 6.39 Cr. in FY 23-24 against the no debt repayment obligation for the same year. The group has a cash & bank balance of Rs. 0.87 Cr. as on 31st March 2024. The current ratio of the group is 1.31 times for FY 23-24. The average fund-based limit for last 12 months ending December 2024 of the group is 93.35%. The liquidity of the group is expected to improve owing to steady cash accruals indicating availability of funds in near to medium term without any debt funded capex.

Outlook: Stable

­

Other Factors affecting Rating

­None.

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	716.46	662.98
PAT	Rs. Cr.	5.64	9.69
PAT Margin	(%)	0.79	1.46
Total Debt/Tangible Net Worth	Times	2.03	2.69
PBDIT/Interest	Times	1.90	3.90

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

­None.

Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)

Not applicable

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 • Trading Entities: https://www.acuite.in/view-rating-criteria-61.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 HDFC Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 35.00 Simple ACUITE BBB- | Stable | Assigned Union Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 30.00 Simple ACUITE BBB- | Stable | Assigned HDFC Bank Ltd Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A3+ | Assigned Union Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 15.00 Simple ACUITE A3+ | Assigned Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE BBB- | Stable | Assigned

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

S.No. Company name 1. Dwaraka Iron Industries Private Limited 2. Dwaraka Ispat Private Limited 3. Srinivasa Steel Traders ­

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.