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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 9.10 | ACUITE BBB+ | Stable | Downgraded | Negative to Stable | - |
| Bank Loan Ratings | 134.00 | - | ACUITE A2 | Downgraded |
| Total Outstanding | 143.10 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has downgraded the long-term rating to ‘ACUITE BBB+’ (read as ACUITE triple B plus) from ‘ACUITE A-’ (read as ACUITE A minus) and short-term rating to 'ACUITE A2' (read as ACUITE A two) from 'ACUITE A2+' (read as ACUITE A two plus) on the Rs. 143.10 Cr. bank facilities of Global Surfaces Limited (erstwhile Global Stones Private Limited). The outlook is revised to 'Stable' from 'Negative'.
Rationale for downgrade The rating factors that the financial parameters of the group are deteriorating on a sequential quarter on quarter basis, EBITDA of the group stood at Rs. -5.31 Cr. in Q3FY2025 against Rs. 1.72 Cr. in Q2FY2025 and Rs. 7.45 Cr. in Q1FY2025. PAT stood at Rs. -10.43 Cr. in Q3FY2025 against Rs. -6.20 Cr. in Q2FY2025 and Rs. -1.26 Cr. in Q1FY2025. The reason for operating loss in Q3FY2025 due to the volatility in the prices of raw material. The benefits from operationalization of Dubai plant are expected from next quarter and will remain a key monitorable. However, the rating draws comfort from healthy financial risk profile and adequate liquidity position. Acuité believes that the group’s ability to grow its scale of operations and profitability while maintaining a healthy capital structure remains a key rating monitorable. The rating is further constrained on account of intensive working capital requirement of operations. |
| About the Company |
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The company was incorporated as Swastik Niwas Private Limited on August 23, 1991 and its name was changed to Global Stones Private Limited in 2004. The company was renamed to Global Surfaces Private Limited on October 20, 2021 and subsequently converted to public limited company; Global Surfaces Limited on October 21, 2021. Global Surfaces Limited (GSL), erstwhile rated as Global Stones Private Limited was takeover in 2004 by Mr. Rajiv Shah. The company is a one Star export house engaged in producing and exporting of slabs made of granite, marbles and engineered quartz. The manufacturing units are located at Jaipur, Rajasthan. The company exports granite and marble slabs to USA, Canada, UK, UAE etc.
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| About the Group |
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Global Surfaces FZE is a company incorporated in the laws of United Arab of Emirates. The company was incorporated on 23rd December 2021. The company is engaged in the manufacturing of quartz slabs. Mr. Mayank Shah and Ms. Sweta Shah are the directors of the company.
Global Surfaces Inc. is a company incorporated in the laws of United States. The company was incorporated on 20th April 2020 and is engaged in trading of quartz slabs. Superior Surfaces Inc. was incorporated on May 5, 2023, in the State of Texas, USA. SSI is involved in the business of distributing artificial stones, including engineered quartz. Global Surfaces FZE, Global Surfaces Inc. and Superior Surfaces Inc. are subsidiaries of Global Surfaces Limited and together referred as Global Group. |
| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profile of Global Surfaces Limited, Global Surfaces FZE, Global Surfaces Inc. and Superior Surfaces Inc. The consolidation is in view of the common ownership and strong operational and financial linkages within the group.
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| Key Rating Drivers |
| Strengths |
| Experienced promoters with established track record of operations
The promoters of Global Surfaces Limited (GSL) have long experience in marble industry. GSL’s board of directors comprises of six directors namely Mr. Mayank Shah, Mrs. Sweta Shah, Mr. Ashish Kachawa, Mr. Yashwant Kumar Sharma, Mr. Sudhir Baxi, and Dr. Chandan Chowdhury. Mr. Mayank Shah is the managing director and has around two decades of experience in the industry. The other five directors who are professionally running the company ably support him. Acuité believes that the group will continue to benefit from its experienced management and long track record of operation in the industry. Healthy Financial Risk Profile The financial risk profile of the group is marked by net-worth of Rs. 332.22 Crore in FY24 against Rs. 261.31 Crore in FY23. The total debt of the group stood at Rs. 144.63 Crore in FY24 against Rs. 166.20 Cr. in FY23. Further, the debt-equity ratio of the group stood at 0.44 times in FY24 against 0.64 times in FY23. Despite slight moderations, the interest coverage ratio of the group stood at 6.09 times in FY24 against 10.73 times in FY23 and DSCR of the group stood at 3.36 times in FY24 against 8.05 times in FY23 and TOL/TNW ratio stood at 0.51 times in FY24 against 0.69 times in FY23. Acuité believes that the financial risk profile of the group will remain healthy in near to medium term. |
| Weaknesses |
| Decline in business profitability
The group has reported revenue of Rs. 225.29 Crore in FY24 against Rs. 179.26 Crore in FY23. However, the EBITDA Margin of the group stood at 16.61% in FY24 against 21.10% in FY23 due to the increase in price of raw materials and the PAT Margins of the group stood at 8.78% in FY24 against 13.52% in FY23. The 9MFY25 revenues and EBITDA margin were at Rs. 150.17 Cr. and 2.57% against 9MFY24 revenues and EBITDA margins of Rs. 116.67 Cr. and 16.09% respectively. Margins declined due to the volatility in the prices of raw material and other administrative expenses. The depreciation and finance cost are also high after the operationalisation of Dubai plant which impacted overall profitability of the group. Acuite believes going forward stabilization of Dubai plant will impact the overall operating performance and margins that will remain a key monitorable. Working capital intensive nature of operations The working capital operations of the group is intensive marked by GCA days of 319 days in FY24 against 209 days in FY23. There is an increase in the GCA days due to the inventory days of the group which stood at 149 days in FY24 against 113 days in FY23, debtor days of the group stood at 178 days in FY24 against 90 days in FY23 and creditor days stood at 106 days in FY24 against 57 days in FY23. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity profile of the group adequate. The net cash accruals of group stood at Rs. 28.71 Cr. in FY 24 against the debt repayment of Rs. 4.08 Cr. The group has cash & bank position of Rs. 2.59 Cr. and current ratio stood at 2.24 times for FY 24. The average fund based bank limit utilization is at ~70% for the 6 months’ period ending September 2024. It is expected that Rs. 150 Cr. additional capital against issue of share warrants would be received between March to June 2025.
Acuité believes that the liquidity position of the group will remain adequate on account of healthy net cash accruals against matured debt obligations over the medium term. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 225.29 | 179.26 |
| PAT | Rs. Cr. | 19.78 | 24.24 |
| PAT Margin | (%) | 8.78 | 13.52 |
| Total Debt/Tangible Net Worth | Times | 0.44 | 0.64 |
| PBDIT/Interest | Times | 6.09 | 10.73 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not Applicable
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| Any Other Information |
| None |
| Applicable Criteria |
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• 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 |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||
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