Press Release June 16, 2026 SARTHAK ISPAT PRIVATE 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	40.00	ACUITE BBB+ | Stable | Assigned	-	RBI
Total Outstanding	0.00	40.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-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 long term rating of 'ACUITE BBB+' (read as ACUITE triple B plus) on the Rs. 40 Cr. bank facilities of Sarthak Ispat Private Limited. The outlook is 'Stable'. Rationale for rating The rating takes into cognizance benefits derived from the promoters in the iron and steel industry, locational advantage as Chhattisgarh is in close proximity to various steel plants and a healthy mix of customers including EPC and Government players. The company has registered revenues of about Rs. 787.08 Cr. in FY 26(Prov) as compared to Rs. 722.12 Cr. in FY 25 with an operating profitability of about 4.76 percent in FY 26(Prov) as compared to 4.09 percent in FY 25. With the ongoing capex for capacity enhancement, the revenues and operating profitability is expected to grow further in near term. The financial risk profile of the company is moderate marked by improving networth, moderate gearing and comfortable debt protection metrices. The rating also derives comfort from the efficient working capital cycle and adequate liquidity position of the company. However, these strengths are partly offset by susceptibility of profitability to volatility in raw material prices and presence in a competitive industry.

About the Company

Incorporated in 2007, Chhattisgarh based, Sarthak Ispat Private Limited (SIPL) is engaged in manufacturing of structural steel products such as MS beams, channels, angles, HR strips and rounds. The products are majorly used in infrastructure, construction, and fabrication among others. The total installed capacity of the plant for rolled products is 1,45,000 MTPA and is expected to increase to 2,35,000 MTPA from July 2026 onwards. The company sells its products under the brand name of Sarthak. The operations of the company are managed by Mr. Chaitanya Garg and Mr. Sachin Garg.

Unsupported Rating

­Not Applicable

Analytical Approach

Acuite has taken standalone business and financial risk profile of Sarthak Ispat Private Limited to arrive at the rating.

Key Rating Drivers

Strengths

Experienced management and reputed customer profile The directors of the company have decade of experience in the iron and steel industry. The company also caters to a mix of Government and private customers. The company also enjoys locational advantage as the manufacturing plants are located in Chhattisgarh, which is closely linked to various steel plants and raw material sources. Acuite believes the benefits derived from the promoters, relationship with the customers and efficient sourcing of raw materials  will help the company going forward. Increase in Revenues and operating profitability The revenues of the company have increased to Rs. 787.08 Cr. in FY 26(Prov) as compared to Rs. 722.12 Cr. in FY 25 majorly on account of increase in volume sold of structural products and scrap sales. Furthermore, with the increase in capacity by 90,000 MTPA from July 2026 onwards, the company aims to achieve revenues of about Rs.1000 Cr- Rs. 1100 Cr. from FY 27 onwards. The operating profitability has increased to 4.76 percent in FY 26(Prov.) as compared to 4.09 percent in FY 25 on account of better absorption of costs.  The company is undertaking a capital expenditure of capacity enhancement by 90,000 MTPA with a project cost of Rs. 72.34 Cr. to be funded in a mix of debt and promoters contribution. The expected date of commercial production is July 2026. Acuite believes that post stabilisation of the capex, the revenues and operating profitability is expected to increase in the near term.  Moderate financial risk profile The financial risk profile of the company is moderate marked by improving net worth, moderate gearing and moderate debt protection metrices. The tangible net worth of the company stood at Rs. 108.46 Cr. as on March 31, 2026 (Prov.) as compared to Rs. 83.09 Cr. as on March 31, 2025 due to accretion to reserves and quasi equity. Acuite has considered unsecured loans of Rs. 49.73 Cr. as quasi equity, as the same has been subordinated to bank loans. The gearing of the company stood at 1.41 times as on March 31, 2026(Prov.) and 1.12 times as on March 31, 2025. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.81 times as on March 31, 2026 (Prov.) as compared to 1.61 times as on March 31, 2025. The debt protection metrices of the company remain moderate marked by Interest Coverage ratio (ICR) of 3.04 times as on March 31, 2026 (Prov.) and debt service coverage ratio (DSCR) of 2.08 times for March 31, 2026 (Prov). The net cash accruals to total debt (NCA/TD) stood at 0.13 times as on March 31, 2026(Prov) as compared to 0.15 times as on March 31, 2025.  Acuité believes that the financial risk profile is expected to improve over the medium term, with steady cash accruals and in the absence of any further debt funded capex plans.  Efficient Working Capital Cycle The working capital cycle of the company is efficient as reflected by Gross Current Assets (GCA) of 92 days for March 31, 2026(Prov) as compared to 86 days for March 31, 2025. The debtor period stood at 24 days as on March 31, 2026(Prov) as compared to 32 days as on March 31, 2024. On average, payments are received within 25-35 days from the customers. Further, the inventory days of the company stood at 63 days as on March 31, 2026(Prov) as compared to 51 days in FY2025. The company maintains inventory of about 2 months. The creditors stood at 15 days as on March 31, 2026(Prov) as compared to 15 days as on March 31, 2025. The suppliers are paid within 15-20 days. Acuité believes that the working capital operations of the company is expected to remain in similar lines over the medium term.

Weaknesses

Intense competition and inherent cyclicality in the steel industry The company is operating in a competitive and fragmented industry due to the presence of a large number of unorganized players and low entry barriers. Moreover, demand for steel products predominantly depends on the construction and infrastructure sectors. Also profitability is dependent of fluctuations in prices of key raw materials and the same could remain volatile given the inherent cyclical nature of steel industry. Thus, the profit margins and sales of the company remain exposed to the inherent cyclicality in these sectors.

Rating Sensitivities

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

­Revenue expected to grow to about Rs. 1000 Cr. along with increase in operating profitability in the near term Timely completion and stabilization of the capex plans

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

­Increase in Debt/EBITDA  in near term Elongation of working capital cycle

Liquidity Position

Adequate

The company has adequate liquidity marked by net cash accruals of Rs 20.22 Cr. as on FY2026(Prov.) as against long term debt repayment of Rs. 3.19 Cr. over the same period. Going forward, the net cash accruals is expected to be a range of Rs. 27 Cr- Rs. 35 Cr  as against debt obligations of Rs. 4.96 Cr - Rs 9.24 Cr in two years The cash and bank balance stood at Rs. 2.33 Cr. as on March 31, 2026(Prov) and Rs. 0.73 Cr. March 31, 2025. Further, the current ratio of the company stood at 1.38 times as on March 31, 2026(Prov) as compared to 1.44 times as on March 31, 2025. The management has financial flexibility to infuse funds as and when required. The average bank utilization limit of the company for 6 months ended March 2026 is 85 percent. The company has ongoing capex plans of capacity enhancement to be funded in a mix of debt and promoters contribution. Acuité believes that the liquidity of the company is expected to remain adequate over the near to medium term on account of steady cash accruals and in the absence of any further debt funded capex plans.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 26 (Provisional)	FY 25 (Actual)
Operating Income	Rs. Cr.	787.08	722.12
PAT	Rs. Cr.	15.80	10.97
PAT Margin	(%)	2.01	1.52
Total Debt/Tangible Net Worth	Times	1.41	1.12
PBDIT/Interest	Times	3.04	2.53

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

­None

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

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Vedika Lahoti Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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