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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 70.00 | ACUITE BBB | Stable | Assigned | - |
| Bank Loan Ratings | 146.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 216.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed the long-term rating of 'ACUITE BBB' (read as ACUITE triple B) on the Rs. 146.00 Cr. bank facilities of G R Integrated Steel Private Limited (GRISPL). The outlook is 'Stable'.
Acuite has assigned the long-term rating of 'ACUITE BBB' (read as ACUITE triple B) on the Rs. 70.00 Cr. bank facilities of G R Integrated Steel Private Limited (GRISPL). The outlook is 'Stable'. Rationale for reaffirmation
The rating reaffirmation reflects the completion of the project and production started on September 16, 2024. Further, the rating reflects the synergies derived from the backgrounds of the promoters and group companies who are into the business of iron and steel for over two decades. Furthermore, the rating factors include the absence of any offtake/demand risk, procurement risk and a positive industry outlook. However, these strengths are partly offset by the company’s moderate financial risk profile and the inherent cyclical nature of the steel industry. |
| About the Company |
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Incorporated in 2021, G R Integrated Steel Private Limited (GRISPL) is setting up a 6,00,000 MT iron ore pellet plant and 8,50,000 MT beneficiated iron ore plant. Based in Chhattisgarh, the company is managed by Mr. Ramesh kumar Ganpatrai Agrawal, Mr. Chetan Agrawal and Mr. Keshav Kumar Agrawal.
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| Unsupported Rating |
| ACUITE BB+/Stable |
| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of GRISPL to arrive at the rating. While arriving at the rating of GRISPL, Acuité has taken into account a strong level of support from the GR group given that G R Sponge and Power Limited (GRSPL) and N R Sponge Private Limited (NRSPL) have an 97.60 per cent stake in GRISPL and corporate guarantee extended to GRISPL by GRSPL and NRSPL.
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| Key Rating Drivers |
| Strengths |
| Experienced management
G R group has established a long presence of over two decades in the iron and steel industry. The group is promoted by Mr. Ramesh kumar Ganpatrai Agrawal with an industry experience of over two decades and is supported by the second-generation promoters Mr. Keshav Agarwal and Mr. Chetan Agrawal. Further, GRSPL and NRSPL has provided corporate guarantee to GRISPL and all the three-promoter directors of the group namely Mr. Chetan Kumar Agarwal and Mr. Keshav Kumar Agarwal have given personal guarantee GRISPL. Further, the cost escalation of Rs.16.44 Cr. in the project is met through promoters infusion of funds. As on 31.07.2024, Equity infusion stood at Rs.37.50 Cr. and Unsecured loan infusion at Rs.53.42 Cr. Acuité believes that the long track record of operations and the vast experience of the promoter will continue to support the group’s growth plans going forward. No Off-take/ Demand Risk
The company does not have as such any off take or demand risk, as the pellet plant will be a backward integration for the group and will serve the raw material requirement for the sponge iron production of the group companies engaged in the manufacturing of sponge iron. The pellets manufactured by GRISPL will be consumed by GRSPL, NRSPL and Chaman Metallics Limited (CML) which will be used for making sponge iron and the balance expected to be sold in the open market. Total production capacity of sponge iron of the group is 3,15,000 MTPA, which has an estimated pellet requirement of 4,72,500 MTPA, which can be easily satisfied by the 6,00,000 MTPA of iron ore plant. Hence, the entire requirement of iron ore of the GR Group will be met primarily through the production from GRISPL. Further, the project is located at Mudpar Village, Bemetara District, Chhattisgarh, in close proximity to existing plants of G R Sponge and Power Limited. The company is expected to procure iron ore fines from mines of Chhattisgarh and Orissa. Acuité believes GRSIPLs ability to execute the timely supply of pellets to its group companies will be a key rating monitorable. Commencement of operations The construction of the plant was completed in July 2024 and production started from September 16, 2024. Further, the company is expecting to generate Rs.180.00 Cr. of revenue in FY2025. Acuite believes that with production started in September 2024, the scale of operations will improve strongly over the medium term. |
| Weaknesses |
| Moderate Financial risk profile
The company’s capital structure is moderate with a moderate net worth and high gearing over the medium term. The tangible net worth of the company improved to Rs.66.95 Cr. as on March 31, 2024 (Prov) as against Rs.36.06 Cr. as on March 31, 2023 due to equity infusion by the promoters. The net worth includes quasi equity of Rs.29.05 Cr. which is subordinate to bank loans. Furthermore, the company has infused unsecured loans (treated under quasi-equity) of Rs.24.37 Cr. in FY2025. The total debt of the company stood at Rs. 121.28 Cr. as on March 31, 2024 (prov) which consists of term loans for the completion of the project. Further, Rs.18.72 Cr. is disbursed in FY2025. The gearing of the company stood moderate with 1.81 times as on March 2024 (prov). Acuité believes that going forward, the financial risk profile of the company is expected to improve over the medium term as operations are expected to be started in September 2024. Intense competition and inherent cyclical nature of the steel industry The downstream steel industry remains heavily fragmented and unorganised. The group is exposed to intense competitive pressures from large number of organised and unorganised players along with its exposure to inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature. |
| Rating Sensitivities |
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| Liquidity Position: Adequate |
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The company’s adequate liquidity position is expected to support debt servicing in the near-to-medium term as net cash accrual is expected to be adequate, post start of operations as there will be no off-take risk and a fixed conversion charge. Further, with the operation commencement from September 2024 and the debt repayment commencing in April 2025 (on a quarterly basis), the company has sufficient buffer time for the generation of net cash accruals for the repayment of debt.
The sanctioned fund-based limits are expected to provide cushion to the working capital cycle post commencement of operations. The unencumbered cash and bank balance stood at Rs.0.88 Cr. as on March 31, 2024 (prov). However, the timely commencement of the project and the generation of expected cash accruals will be key rating sensitivity factors. |
| Outlook: Stable |
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Acuité believes that GRSIPL will maintain a 'Stable' outlook on the basis of the positive outlook in the steel industry completion of project and no demand/offtake risk. The outlook may be revised to 'Positive' in case of timely stabilisation of operations with generation of expected turnover. Conversely, the outlook may be revised to 'Negative' in case of slippages in commencement of operations.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 5.82 | 1.89 |
| PAT | Rs. Cr. | 0.31 | 0.01 |
| PAT Margin | (%) | 5.31 | 0.41 |
| Total Debt/Tangible Net Worth | Times | 1.81 | 0.00 |
| PBDIT/Interest | Times | 15.21 | 121.33 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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