Press Release April 22, 2026 KHAYATI STEEL INDUSTRIES 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	230.50	ACUITE BBB | Stable | Assigned	-	RBI
Bank Loan Ratings	0.00	15.00	-	ACUITE A3+ | Assigned	RBI
Total Outstanding	0.00	245.50	-	-	-
Total Withdrawn	0.00	0.00	-	-	-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) and short-term rating of ‘ACUITÉ A3+' (read as ACUITE A three plus) on the Rs. 245.50 Cr. bank facilities of Khayati Steel Industries Limited (KSIL). The outlook is ‘Stable’. Rationale for Rating The rating assigned factors in the company’s steady business risk profile along with established operational track record and experienced management. The rating also factors in the healthy financial risk profile and efficient working capital management. However, the rating is constrained due to exposure to related/ unrelated entities in the form of investment or loans and susceptibility of profitability to volatility in raw material prices in an intensely competitive and cyclical steel industry.

About the Company

­Khayati Steel Industries Limited (KSIL) was incorporated in April 2008 and is engaged in the manufacturing of Thermax TMT bars under the brand name 'Apex'. The company operates manufacturing facilities located at Thandya Industrial Area in Mysore district and Tumkur. Additionally, KSIL has installed renewable power capacity aggregating 27 MW, comprising solar and wind energy, which is utilized exclusively for captive consumption. The company is promoted by Mr. Navin Kumar Gupta, who possesses over four decades of experience in the steel industry and oversees the overall operations of the company. KSIL forms part of the Apex Group, based in Mysore, which has diversified business interests across steel, real estate, Agri-technology (moringa and sandalwood), and construction materials.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuite has considered the standalone business and financial risk profile of Khayati Steel Industries Limited (KSIL).

Key Rating Drivers

Strengths

Experienced management with established track record Incorporated in April 2008, Khayati Steel Industries Limited (KSIL) is engaged in the manufacturing of Thermax TMT bars under the brand name “Apex”. KSIL is promoted by Mr. Naveen Gupta, who brings over four decades of experience in the steel industry and oversees overall operations. The company benefits from a strong locational advantage, being the only major TMT bar manufacturer in the Mysore region, which enables it to enjoy a dominant market position and maintain pricing power, including the ability to pass on raw material cost fluctuations. Further, KSIL has established its market presence across Karnataka and Kerala, supported by an extensive dealer and contractor network catering to leading construction players. Steady business risk profile The business risk profile of the company stood steady with marginal improvement in revenues reported at Rs. 545.51 crore in FY25 as compared to Rs. 538.59 crore in FY24 and Rs. 580.21 crore in FY23. The decline in FY24 was primarily due to lower price realizations of steel products, even though sales volumes of TMT bars increased due to industry phenomenon. Further, the company reported revenue of ~Rs.394 crore till 9MFY2026 reflecting continued pressure from subdued price realizations. However, with the Indian steel industry entering a recovery phase and price realizations improving compared to previous years, KSIL anticipates improved performance from Q4FY26 and estimates revenues of around Rs 570 crore for FY26, supported by higher volumes, and better pricing. The operating margin of the company marked moderate improvement and stood at 11.10 per cent in FY25 as compared to 10.92 per cent in FY24, further, the company reported operating margin of 11.7 per cent in 9MFY26. Any kind of major fluctuations in raw material prices is passed on to the customers although at times it comes with a time lag. The PAT margin improved and stood at 4.89 per cent in FY2025 compared to 3.99 per cent in FY2024 primarily driven by interest income earned on short-term loans extended to certain companies at rates ranging between 10–12 per cent. Acuite believes the scale of operations and profitability margins of the company will improve steadily with expected improvement in realisations and industry growth in near to medium term. Healthy financial risk profile The company’s healthy financial risk profile is marked by improving net worth, low gearing and healthy debt protection metrics. The tangible net worth of the company improved to Rs. 205.97 Cr. as on March 31, 2025, from Rs. 180.56 Cr. as on March 31, 2024, due to accretion of profits. Gearing of the company improved to 0.88 as on March 31, 2025, as compared to 1.07 as on March 31, 2024, due to reduction in the debt burden. The total debt of the company stood at Rs. 181.67 crore as on March 31, 2025, comprising of Rs. 103.57 crore of long-term debt, Rs.0.32 crore of USL from promoters and Rs. 77.78 Crore of short-term debt as against total debt of Rs. 193.72 Crore as on March 31, 2024. Total outside Liabilities/Tangible Net Worth (TOL/TNW) further improved to 1.17 times as on March 31, 2025, as against 1.40 times as on March 31, 2024. The healthy debt protection metrics of the company are marked by Interest Coverage Ratio (ICR) at 3.96 times in FY25 compared to 3.52 times in FY24 and Debt Service Coverage Ratio (DSCR) at 1.33 times in FY25 compared to 1.30 times in FY24. KSIL has planned monetisation of its renewable energy assets, the proceeds of which are intended to be utilised towards reducing reliance on external borrowings and augmenting liquidity. Successful execution of the same is expected to strengthen the company’s financial risk profile going forward.   Efficient working capital Management The working capital operations of the company is managed efficiently marked by Gross Current Assets (GCA) at 104 days as on March 31, 2025, as compared to 89 days as on March 31, 2024. The GCA days have increased in FY25 as compared to previous years on account of high other current assets that majorly consists of short-term interest-bearing loans given to certain companies to the tune of Rs.40 Cr. in FY2025. The inventory days stood at 58 days in FY25 as compared to 56 days in FY24. Due to the manufacturing activities involved, the Company has to maintain inventory days of almost two months which comprises of raw materials, work in progress as well as finished goods.  However, the debtor cycle stood at 16 days in FY25 and 18 days in FY24 owing to efficient collection mechanism. The creditor days of the company stood at 5 days in FY25 and 2 days in FY24. Further, the fund-based limit utilization stood ~84 per cent for twelve months ended January 2026. Acuite believes that the working capital operations of the company will remain around similar levels over the medium term.

Weaknesses

Exposure to related/unrelated entities through investments and loans KSIL has a high exposure to related/unrelated entities in the form of investments and loans, excluding investments made in Independent Power Producer (IPP) companies. As of FY25, the company had deployed ~Rs.116 crore in certain entities, which constituted around 56% of its net worth. This elevated level of fund deployment outside core operations has contributed to an increased reliance on short term borrowings. As per management, Rs. 20 crores have already been recovered, while a further Rs.20 crore is expected to be realised by Q1 FY27. The timely recovery of the remaining loans will remain critical to KSIL going forward, any delay or higher exposure to these entities may moderate the credit risk profile of the entity. Susceptibility of profitability to volatility in raw material prices, Intense competition and inherent cyclical nature of the steel industry The company’s operating and financial performance remains inherently vulnerable to the cyclical nature of the steel industry, which is closely linked to the performance of end user sectors such as real estate, construction, engineering, and broader domestic and global economic conditions. Profitability is further exposed to volatility in key raw material prices— primarily iron ore, and sponge iron—where any sharp increase, coupled with limited ability to fully pass on costs during periods of weak demand, can compress operating margins. The highly fragmented and competitive nature of the steel sector, with a large presence of organised and unorganised players, intensifies pricing pressure and impacts realisations. Acuite believes that the company will continue to remain susceptible to cyclicality, raw material price fluctuations, and competitive pressures, which collectively translate into volatility in operating margins and cash flows.

Rating Sensitivities

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

­Consistent growth in revenues by over 15 per cent along with stable profitability Successful completion of the asset monetization, leading to material reduction in debt levels, sustained strengthening of liquidity metrics, and a demonstrated shift towards an asset-light operating model with lower leverage Timely recovery of loans and advances extended to related/unrelated entities

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

Deterioration in financial risk profile on the back of unexpected debt funded capex leading stretch in liquidity Elongation in working capital cycle Debt service coverage ratio (DSCR) below 1.20 time

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. 39.21 Cr. in FY25 as against long term debt repayment of only Rs. 25.29 Cr. during the same period. Going forward, the company is expected to generate net cash accruals in the range of Rs. 40-45 Crore in FY26-27 against it its repayment obligation of Rs. 28-25 crore during the same period. Further, the fundbased limit utilization stood ~84 per cent for twelve months ended January 2026.  The current ratio also stood strong at 1.16 times as on March 31, 2025. The cash and bank balances of the company stood at Rs. 0.57 Cr. as on March 31, 2025. 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 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	545.51	538.59
PAT	Rs. Cr.	26.65	21.50
PAT Margin	(%)	4.89	3.99
Total Debt/Tangible Net Worth	Times	0.88	1.07
PBDIT/Interest	Times	3.96	3.52

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

­Care, vide its press release dated March 04th, 2026 had denoted the rating of Khayati Steel Industries Limited (KSIL) as Care BB+/ Stable/ A4+ , Downgraded and Issuer not co-operating.

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

List of instruments and names of regulators of the instruments

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The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. 4 The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators. 5 These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.   B. Other activities:   Sr. No. Activity Name Regulator of the activity 1 Monitoring Agency SEBI 2 Research activities, incidental to rating, such as research for Economy, Industries and Companies 6 Not applicable 6 permitted by SEBI vide SEBI Master Circular for CRAs. 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