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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 9.55 | ACUITE BBB | Positive | Reaffirmed | Stable to Positive | - |
| Bank Loan Ratings | 20.15 | ACUITE BBB | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 0.54 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 2.25 | - | ACUITE A3+ | Assigned |
| Bank Loan Ratings | 14.20 | - | ACUITE A3+ | Reaffirmed |
| Total Outstanding | 26.00 | - | - |
| Total Withdrawn | 20.69 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of 'Acuité BBB' (read as Acuité Triple B) and the short-term rating of 'Acuité A3+' (read as Acuité A Three Plus) for bank facilities of Rs. 23.75 crore of RAJPUTANA INDUSTRIES PRIVATE LIMITED. The outlook is revised from 'Stable' to 'Positive'
Further Acuite has assigned short-term rating of 'Acuite A3+' (Acuite A three plus) for bank facilities of Rs. 2.25 crore of RAJPUTANA INDUSTRIES PRIVATE LIMITED. Further Acuite has reaffirmed and withdrawn the long-term rating of 'Acuite BBB' (read as Acuité Triple B) based on request received from client and NOC From Lender on Rs 20.15 core bank facilities RAJPUTANA INDUSTRIES PRIVATE LIMITED. Acuite has also withdrawn the Proposed long-term bank facilities without assigning any rating on the Rs 0.54 crore bank facilities RAJPUTANA INDUSTRIES PRIVATE LIMITED based on request from Client. Rating withdrawal is as per Acuite’s Policy on Withdrawal of Ratings. Rationale for revision in Outlook The rating action takes into account improved operating income, healthy financial risk profile and adequate liquidity Position. Group reported growth in revenue from operations by ~33% in FY2023 to Rs 696.39 crore as against Rs.523.82 crore for FY2022. Group reported operating income of Rs ~590 crore in 9m of FY 24 as against Rs ~489 crore in corresponding previous period. Net profit margin of the group stood at 1.92 percent in 9M FY24 as against 1.34 percent for the corresponding previous period. Financial risk profile of the group remains healthy on account of healthy net worth, comfortable gearing and moderate coverage indicators. Interest coverage ratio stood at 2.07 times for FY 23 as against 2.02 times for FY 22 and Debt Service coverage ratio stood at 1.09 times for FY2023. Group has healthy business risk profile in 9M FY 24. Acuité believes that the Company’s ability to grow its scale of operations and profitability while maintaining a healthy capital structure with improvement in working capital operations remains a key rating indicator. |
| About Company |
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Jaipur based, Rajputana Industries Private Limited (RIPL) was incorporated in the year 2011 by Mrs. Shivani Sheikh. The company is engaged in the manufacturing of copper, cooper alloy and cupronickel casted, extruded and drawn products which are billets/ingots, Mother shells, Tubes/pipes, Hollow/solid rods, sections and profiles etc.
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| About the Group |
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Shera Group (SG) was formed with the establishment of a proprietorship firm, Shera Metals & Engineers, in 2003 by Mr. Naseem Sheikh. SEL had three subsidiaries: Shera Metal Private Limited (SMPL), Rajputana Industries Private Limited (RIPL), and Shera Infrapower Private Limited (SIPL). SMPL is engaged in the manufacturing of copper bus bar, tin-plated copper bus bar, PCC poles, brass rod and wire, and paper-covered copper strips, while RIPL was incorporated with a view to securing a backward integration of its product lines manufactured by SEL and SMPL through the manufacturing of mother tubes of brass (copper and zinc mix) tube, copper nickel (copper nickel mix) tube, and brass rod and section (copper and zinc). Group has now sold Shera Infrapower Private Limited and floated one subsidiary in Zambia names as Shera Zambia Limited.SEL now has three subsidiaries: Shera Metal Private Limited (SMPL), Rajputana Industries Private Limited (RIPL) and Shera Zambia Limited.SG caters to the intermediate product requirements of various industries, such as transformers, electric and electronic goods, refineries, construction, the capital goods industry, sugar plants, automobiles, and aviation, to name a few.
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| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated business and financial risk profiles of Shera Energy Limited (SEL), Shera Metal Private Limited (SMPL), Rajputana Industries Private Limited (RIPL), and Shera Zambia Limited to arrive at this rating. The consolidation is on account of common management, presence in the same line of business, and significant business and financial synergies between the entities. The group is herein referred to as "Shera Group (SG)"
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| Key Rating Drivers |
| Strengths |
| Experienced management and an established track record of operations
The group is a producer of copper and aluminium winding wires along with other products like bus bars of copper, aluminium, and brass, copper, copper alloys, and cupronickel casted, extruded, and drawn products, viz. billets and ingots, mother shells, tubes and pipes, rods, profiles, and sections. The promoters and directors of the group have over a decade of experience in the aforementioned industry. SG caters to the demands of various industries, such as LPG valve manufacturing, automobiles, forging, marine, power generation, and the electrical industry, to name a few, through its diversified product portfolio. Business risk profile Shera Group’s operation witnessed improvement which is apparent from growth in revenue from operations by ~33% in FY2023 to 696.39 crore as against Rs. 523.82 crore for FY2022. The operating profit margin of the company went down by 66 bps in FY 23. Operating Profit Margin of group stood at 4.67% in FY2023 as against 5.33% in FY2022 however the net profit margin of the group increased by 5 bps and stood at 1.31 percent in FY2023 as against 1.26 percent in FY 22. ROCE of the group stood at 13.47 percent in FY2023. Group reported operating income of Rs ~590 crore in 9m of FY 24 as against Rs ~489 crore in corresponding previous period. Net profit margin of the group stood at 1.92 percent in 9M FY24 (inclusive of profit on sale of investment) as against 1.34 percent for the corresponding previous period. Recently group has started supplying bullet shells to the companies which are in business of arms and ammunition. Group is currently supplying 40 to 50 Tonnes of bullet shells per month and same is expected to grow by 80 to 100 tonnes per month in next fiscal. Group has purchased plant and machinery for manufacturing cables in current fiscal and construction of shed is under way and expected to be completed by March 24. Management is expecting to generate operating income of Rs 200 to Rs 250 crore in next fiscal from the cables segment. Comfortable Financial Risk Profile The group has comfortable financial risk profile marked by healthy net worth, comfortable gearing and moderate coverage indicators. Group follows conservative leverage policy. Debt to Equity ratio improved by 28 bps and stood at 0.83 times in FY 2023 as against 1.11 times in FY 22. Improvement is on account of profits accretions and capital infusion. Going forward gearing is expected to improve in near medium term. Further, the interest coverage ratio stood at 2.07 times for FY2023 as against 2.02 times in FY2022. Likewise, Debt Service coverage ratio stood at 1.09 times for FY2023 as against 0.98 times in FY2022. Going forward coverage indicators are expected to improve in near medium term. Total outside liabilities to total net worth (TOL/TNW) stood at 2.13 times as on FY2023 vis-à-vis 2.45 times as on FY2022. Debt-EBITDA improved and stood at 2.94 times as on 31st March 2023 as against 3.64 times as on 31st March 2022. The Net Cash Accruals to Total debt stood at 0.14 times as on FY2023 and 0.11 times for FY2022. The financial risk profile of the company is expected to improve and remain comfortable. |
| Weaknesses |
| Competitive industry and susceptibility to raw material prices
Copper and aluminium are highly competitive industries characterised by low entry barriers, which results in intense competition from the large number of organised and unorganised players present in the downstream segment providing similar products and services. Hence, the bargaining power of the company remains low due to the competitive nature of the industry. However, the risk is mitigated to an extent on account of the established track record of operations. Further, SG’s revenue and profitability are susceptible to volatility in copper and aluminium prices. Working capital operations- Moderate Group has moderate working capital requirements as evident from gross current assets (GCA) of 145 days in FY2023 as compared to 158 days in FY2022. Debtor days stood at 50 days in FY2023 same as in FY 22. Inventory days stood at 88 days in FY 22 as against 102 days in FY 23. |
| Rating Sensitivities |
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Improvement in the profitability margins. Deterioration in its working capital management. Deterioration in the financial risk profile of the company. Company's ability to achieve the financial position as envisaged. |
| Liquidity Position |
| Adequate |
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Group has adequate liquidity marked by net cash accruals to its maturing debt obligations, current ratio, cash and bank balance. Group generated cash accruals of Rs. 14.06 crore for FY2023 as against debt repayment obligations of Rs. 11.58 crores for the same period. Current Ratio stood at 1.31 times as on 31 March 2023 as against 1.20 times in the previous year. Cash and Bank Balances of company stood at Rs 3.47 crores. The liquidity of the group is expected to improve with group expected to generate cash accruals in the range of Rs. 25 to 35 Cr. with debt obligation of Rs 10 to 12 crore will also support the liquidity of the company.
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| Outlook: Positive |
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Acuité believes that SG will maintain a ‘Positive’ outlook and will continue to derive benefits over the medium term from its extensively experienced promoter and the business strategies being implemented. Rating may be upgraded if the group demonstrates substantial and sustained growth in its margins and turnover from the current levels while maintaining its healthy capital structure. Conversely, the outlook may be revised to ‘Stable’ if the group generates lower-than-anticipated cash accruals, most likely as a result of a sharp decline in operating margins or a deterioration in working capital leading to a higher reliance on external borrowings, thereby impacting its financial risk profile, particularly its liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 696.39 | 523.82 |
| PAT | Rs. Cr. | 9.11 | 6.62 |
| PAT Margin | (%) | 1.31 | 1.26 |
| Total Debt/Tangible Net Worth | Times | 0.83 | 1.11 |
| PBDIT/Interest | Times | 2.07 | 2.02 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| 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 • Complexity Level Of Financial Instruments: https://www.acuite.in/view-rating-criteria-55.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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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
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
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1. Shera Energy Limited 2. Shera Metal Private Limited 3.Rajputana Industries Private Limited 4. Shera Zambia Limited |
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Contacts |
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