Press Release July 17, 2024 KBS INDUSTRIES LIMITED (ERSTWHILE KBS INDUSTRIES PRIVATE LIMITED) Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	61.50	ACUITE BBB | Stable | Reaffirmed | Negative to Stable	-
Bank Loan Ratings	48.50	-	ACUITE A3+ | Reaffirmed
Total Outstanding	110.00	-	-

Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) and the short-term rating of ‘ACUITE A3+ ’ (read as ACUITE A three plus) on the Rs. 110.00 crore bank facilities of KBS Industries Limited (Erstwhile KBS Industries Private Limited)(KBSIL). The outlook revised from 'Negative' to 'Stable'. Rationale for outlook change The outlook of the company is revised from negative to stable on account of improvement in the company’s scale of operations, working capital cycle and sustained debt coverage indicators. However the rating remains constrained on account of high bank limit utilization and dip in operating margins and remains a key rating sensitivity.

About the Company

KBS Industries Limited (Erstwhile KBS Industries Private Limited)(KBSIL) was incorporated in 2012, promoted by Mr. Arjun Anand,  is engaged in the business of manufacturing of high quality semifinished copper and copper alloy products like copper wire rods, ingots etc which are widely used in engineering, electrical and manufacturing industries. The factory is based at Barhi Industrial Area, Haryana and another recently established facility is located at Silvassa. The plants have an installed capacity of 5600 MTPA for each location.­

Unsupported Rating

Not Applicable

Analytical Approach

­­­Acuité has considered the standalone business and financial risk profiles of KBS INDUSTRIES LIMITED to arrive at this rating

Key Rating Drivers

Strengths

­Revenue and Profitability The company has reported revenue of Rs. 536.86 Crore in FY24 (prov.) against Rs. 325.06 Crore in FY23. This growth in top line of the company is on account of addition of Vedanta Limited to its customer profile resulting into voluminous sale since Q4FY2023. However, the EBITDA Margins of the company saw minuscule dip and stood at 4.26% in FY24 (prov.) against 5.59% in FY23 as the company is getting lower realization as compared to previous year. Unlike EBITDA margin, the PAT Margins of the company improved and stood at 1.42% in FY24 (prov.) against 1.39% in FY23 on account of lower depreciation. The company has achieved revenue of Rs. 108.55 Crore in April and May 2024. Financial Risk Profile The financial risk profile of the company is moderate marked by moderate net-worth, leverage and coverage indicators. The net worth of the company stood at of Rs. 85.78 Crore in FY24 (prov.) against Rs. 79.05 Crore in FY23 on account of accretion of profit to reserves. The total debt of the company stood at Rs. 98.79 Crore in FY24 (prov.) which consists of long term debt of Rs. 9.75 Crore, Short term debt of Rs. 83.68 Crore and CPLTD of Rs. 5.36 Crore. The debt-equity ratio of the company stood at 1.15 times in FY24 (prov.) against 1.38 times in FY23 and TOL/TNW ratio stood at 1.60 times in FY24 (prov.) against 1.82 times in FY23 showing marginal improvement in the leverage position of the company. Further, the coverage indicators of the company also showed marginal improvement as evident from the interest coverage ratio of the company which stood at 1.83 times in FY24 (prov.) against 1.51 times in FY23 and the DSCR of the company which stood at 1.26 times in FY24 (prov.) against 1.22 times in FY23. Acuité believes that the financial risk profile of the company may improve over the medium term on account of expected improvement in operating performance and repayment of long term debt with no additional debt to be taken in near future.

Weaknesses

­Susceptible to fluctuations in prices of raw material and forex rates The major raw material of the company is copper scrap. The company’s performance remains vulnerable to cyclicality in the copper sector as demand for copper depends on the performance of the end user segments such as construction, electrical & engineering industries etc. Moreover, the prices of the same are fluctuating in nature, therefore the operating profit margins of the company is susceptible to raw material price fluctuation. Customer concentration risk It is susceptible to customer concentration risk as ~42 percent of the company’s products are selling to Vedanta Limited. This makes the company highly susceptible to business risk profile of its top clients. However the aforesaid risk is partly mitigated due to customer’s credibility in the market. Acuité believes that the ability of the entity to expand its customer base in order to mitigate the revenue concentration risk will be a key rating sensitivity factor.

Rating Sensitivities

Improvement in scale of operations while maintaining profitability margins. Further deterioration in working capital operations Ability to expand its customer base in order to mitigate the customer concentration risk.

Liquidity Position

Adequate

­The liquidity profile of the company is adequate. The net cash accruals of company stood at Rs. 8.50 Cr. in FY 24 (prov.) against the CPLTD of Rs. 4.17 Cr. for the same period giving some legroom for growth fund. The company has cash & bank position of Rs. 1.05 Cr. and current ratio stood at 1.47 times for FY 24 (prov.). Company has made Rs. 1.2 Cr. investment in fixed deposits which is entirely unencumbered. The average fund based bank limit utilization is at 95.13% and non-fund based bank limit utilization is at 58.65% for the 9 months’ period ending May 2024.

Outlook: Stable

Acuité believes that KBS's outlook will remain 'Stable' over the medium term deriving comfort from the experienced management along with improvement in revenues while sustaining the financial risk profile. The outlook may be revised to 'Positive' in case of higher than expected growth in its revenues while improving its profitability and liquidity position. The outlook may be revised to 'Negative' in case of considerable decline in revenues and profitability or stretch in its working capital management leading to the deterioration of its financial risk profile and liquidity position.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	536.86	325.06
PAT	Rs. Cr.	7.64	4.51
PAT Margin	(%)	1.42	1.39
Total Debt/Tangible Net Worth	Times	1.15	1.38
PBDIT/Interest	Times	1.83	1.51

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

Not Applicable

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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 26 Apr 2023 Cash Credit Long Term 17.50 ACUITE BBB | Negative (Reaffirmed) Cash Credit Long Term 12.00 ACUITE BBB | Negative (Reaffirmed) Cash Credit Long Term 24.00 ACUITE BBB | Negative (Reaffirmed) Working Capital Term Loan Long Term 3.30 ACUITE BBB | Negative (Reaffirmed) Working Capital Term Loan Long Term 2.40 ACUITE BBB | Negative (Reaffirmed) Working Capital Term Loan Long Term 2.30 ACUITE BBB | Negative (Reaffirmed) Letter of Credit Short Term 14.50 ACUITE A3+ (Reaffirmed) Letter of Credit Short Term 12.00 ACUITE A3+ (Reaffirmed) Letter of Credit Short Term 22.00 ACUITE A3+ (Reaffirmed) 04 Feb 2022 Cash Credit Long Term 17.50 ACUITE BBB | Negative (Reaffirmed) Cash Credit Long Term 12.00 ACUITE BBB | Negative (Reaffirmed) Cash Credit Long Term 24.00 ACUITE BBB | Negative (Reaffirmed) Letter of Credit Short Term 14.50 ACUITE A3+ (Reaffirmed) Letter of Credit Short Term 12.00 ACUITE A3+ (Reaffirmed) Letter of Credit Short Term 22.00 ACUITE A3+ (Reaffirmed) Working Capital Term Loan Long Term 3.30 ACUITE BBB | Negative (Reaffirmed) Working Capital Term Loan Long Term 2.40 ACUITE BBB | Negative (Reaffirmed) Working Capital Term Loan Long Term 2.30 ACUITE BBB | Negative (Reaffirmed)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Canara Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 17.50 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable Bank of Baroda Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 24.00 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable Canara Bank Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 14.50 Simple ACUITE A3+ | Reaffirmed Bank of Baroda Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.00 Simple ACUITE A3+ | Reaffirmed State Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 22.00 Simple ACUITE A3+ | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.72 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable Canara Bank Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Mar 2026 1.09 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable Bank of Baroda Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Mar 2026 1.19 Simple ACUITE BBB | Stable | Reaffirmed | Negative to Stable

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Siddharth Garg Associate Analyst - Rating Operations Tel: 022-49294065 siddharth.garg@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@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.