Press Release

Press Release

February 25, 2026

SHAH SPONGE AND POWER LIMITED
Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	103.10	ACUITE BBB- \| Stable \| Assigned	-
Bank Loan Ratings	94.78	ACUITE BBB- \| Stable \| Reaffirmed	-
Bank Loan Ratings	0.96	-	ACUITE A3 \| Reaffirmed
Total Outstanding	198.84	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuite has reaffirmed the long-term rating of “ACUITE BBB-” (read as ACUITE triple B minus) and short-term rating of “ACUITE A3” (read as ACUITE A three) on Rs.95.74 Cr. bank facilities of Shah Sponge and Power Limited (SSPL). The outlook is “Stable”.
Acuite has also assigned the long-term rating of “ACUITE BBB-” (read as ACUITE triple B minus) on Rs.103.10 Cr. bank facilities of Shah Sponge and Power Limited (SSPL). The outlook is “Stable”.

Rationale for rating
The rating reflects moderation in the scale of operations in terms of revenue and profitability margins owing to decline in price realizations as well as temporary halts during the capex implementation phase. The production slowed down due to monsoon-related disruption and subdued demand. The company also remains exposed to inherent cyclicality in the iron and steel industry. Furthermore, the company has installed 350 TPH Direct Reduced Iron (DRI), 42 TPH Waste Heat Recovery Boiler and a 15 MW solar power plant, which are expected to enhance the scale of operations and profitability margins and the benefit of the same is expected in the near to medium term. The rating also factors in the moderate financial risk profile, marked by steady increase in net worth, moderate gearing and debt protection metrics and adequate liquidity position, backed by steady net cash accruals against debt repayments, maintenance of DSRA account for 3 month’s interest obligation, moderate bank limit utilization and current ratio albeit an intensive working capital cycle owing to high inventory days. In addition, the rating draws comfort from the experienced management, semi-integrated nature of operations and locational advantage of it being located in Jamshedpur, Jharkhand. However, these rating strengths are partially offset by the susceptibility of profitability to volatility in raw material prices and its presence in a highly fragmented industry with low bargaining power.

About the Company

Kolkata Based, SSPL was incorporated in 2005. It is engaged in manufacturing sponge iron, billets and fly ash bricks. SSPL has set up its semi-integrated steel plant at village Juri at Hata from steel city Jamshedpur with an installed capacity of 130000 MT of billets, 172500 MT of sponge iron and 30000000 fly ash bricks per annum. Currently, Ms. Sumitra Kumar Shah, Mr. Shyam Sunder Shah, Mr. Raj Kumar Shah and Mr. Satya Nand Jha are the directors of the company.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of Shah Sponge and Power Limited (SSPL) to arrive at the rating.

Key Rating Drivers

Strengths

Established track record of operations aided by a semi-integrated manufacturing facility
SSPL has established a long track record of operations in the iron and steel industry. The company is managed by Shri Shyam Sunder Shah and Shri Raj Kumar Shah, who have extensive industry knowledge of more than four decades. Acuite believes that the extensive experience of the management and the long track record of operations at SSPL will continue to benefit the company’s growth plans. The company has a partially integrated steel manufacturing facility engaged in the manufacturing of sponge iron, billets, and eco-friendly fly ash brick. The sponge iron required to produce billets is met entirely through the in-house production of sponge iron. The surplus production of sponge iron is sold to other billet manufacturers in the market. Acuite believes the semi-integrated nature of the operations of the company provides efficiency in terms of operations and mitigates the risks arising from the cyclical nature of the steel industry to some extent.

Moderate Financial Risk Profile
The financial risk profile of the company is moderate, marked by steady increase in net worth, moderate gearing and debt protection metrics. The tangible net worth of the company stood at Rs.163.57 Cr as on 31st March 2025 as against Rs.162.39 crore as on 31st March 2024 on account of low accretion of profits into reserves. The gearing stood at 1.10 times as on 31st March 2025 as against 0.78 times as on 31st March 2024. Moreover, the coverage indicators are reflected by the interest coverage ratio, which stood at 2.33 times as on 31st March 2025 as against 2.92 times as on 31st March 2024 and the debt service coverage ratio stood at 1.13 times as on 31st March 2025 as against 1.29 times as on 31st March 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.52 times as on 31st March 2025 as against 1.02 times as on 31st March 2024 and the Net Cash Accruals/Total Debt (NCA/TD) stood at 0.05 times as on 31st March 2025 against 0.09 times as on 31st March 2024. Acuite expects the financial risk profile of the company to remain on similar levels, backed by steady accruals.

Weaknesses

Decline in operating performance
The operating income of the company stood at Rs.415.14 Cr. in FY2025 as against Rs.500.89 Cr. in FY2024 on account of decline in price realization and subdued demand. Additionally, there were temporary halts due to capex implementation and consequently, the same further impacted the revenue of the company to an extent. Moreover, the company has registered revenue of Rs.395.82 Cr. in 10M FY2026 as against Rs.322.57 Cr. in 10M FY2025, supported by the capacity additions of the company. Further, the EBITDA margin stood at 4.88% in FY2025 as against 5.44% in FY2024 owing to increase in administrative and other manufacturing costs. Likewise, the PAT margin stood at 0.28% in FY2025 as against 0.41% in FY2024. The profitability margins are linked to the inherent cyclical steel industry. Acuite expects that the scale of operations will improve over the medium term, backed by demand from the infrastructure segment and stabilization of capacity additions, which will help the company to improve its operational as well as volume-driven cost efficiencies. However, the ability of the company to scale up its operations while improving its profitability margins will remain a key monitorable factor.

Intensive working capital operations
The working capital operations of the company are intensive, marked by GCA days of 132 days in FY2025 as against 108 days in FY2024 owing to the high inventory days, which stood at 118 days in FY2025 as against 82 days in FY2024. The inventory buildup was due to capacity addition and the commissioning phase. Further, the debtor days stood at 1 day in FY2025 as against 4 days in FY2024, wherein the company operates on an advance payment basis, resulting in low debtor days and the creditor days stood at 4 days in FY2025 as against 3 days in FY2024 on the back of advance payment terms with suppliers, resulting in lower creditor days. Additionally, the other current assets stood at Rs.20.59 Cr. in FY2025 which includes advances recoverable in cash or kind, insurance claims receivable, balances with statutory authorities and other receivables and recoveries. Acuite expects the working capital operations of the company to remain at similar levels over the medium term.

Susceptibility of profitability to raw material price volatility
The price of iron ore/ coal and others, which are the main raw materials and finished steel products prices are highly volatile in nature. The company is exposed to the risk of price volatility from the time of procurement of the product till sale of the same. This also exposes the risk of the company’s growth and profitability.

Exposure to the cyclical and competitive steel sector
The steel industry is cyclical in nature and witnessed prolonged periods where it faced a downturn due to excess capacity leading to a downtrend in the prices. However, the outlook for the steel industry in the short to medium term appears to be good, with expected robust demand in the domestic markets driven by various government initiatives and expected improvement in the infrastructure and real estate sector. However, any adverse fluctuations in the prices of finished products or any downturn in the steel sector may impact the company adversely.

Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix)

The company maintains a Debt Service Reserve Account (DSRA) equivalent to 3 months of interest debt servicing obligation.

Stress Case scenario
Acuite believes that as the company is maintaining DSRA mechanism equivalent to 3 months of interest debt servicing obligation, the company will be able to service its debt on time, even in a stress scenario.

Rating Sensitivities

Movement in operating income and profitability margins.
Movement in Working Capital cycle.
Movement in capital structure and debt protection metrices.

Liquidity Position

Adequate

The liquidity position of the company is adequate as reflected by sufficient net cash accruals of Rs.9.79 Cr. in FY2025 as against debt repayment obligations of Rs.7.62 Cr. during the same period. The cash and bank balance of the company stood at Rs.1.55 Cr. in FY2025 as against Rs.0.33 Cr. in FY2024. The current ratio stood moderate at 1.19 times in FY2025 1.47 times in FY2024. Further, unsecured loans from the director stood at Rs.0.50 Cr. in FY2025. These are interest free and infused according to the business requirements. The company also maintains DSRA account of 3 months interest, which provides additional security to the lender. Moreover, the fund based and non-fund based working capital limits stood moderately utilized at 74.37% and 12.78% respectively for the last six months ended January 2026. Acuite expects the company to maintain adequate liquidity position supported by steady accruals against debt repayment, flexibility to infuse funds by the director and maintained DSRA, moderate bank limit utilization and current ratio.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	415.14	500.89
PAT	Rs. Cr.	1.18	2.05
PAT Margin	(%)	0.28	0.41
Total Debt/Tangible Net Worth	Times	1.10	0.78
PBDIT/Interest	Times	2.33	2.92

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
02 Dec 2025	Forward Contracts	Short Term	0.96	ACUITE A3 (Assigned)
	Cash Credit	Long Term	42.50	ACUITE BBB- \| Stable (Assigned)
	Covid Emergency Line.	Long Term	7.57	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	4.32	ACUITE BBB- \| Stable (Assigned)
	Term Loan	Long Term	40.00	ACUITE BBB- \| Stable (Assigned)
	Proposed Long Term Bank Facility	Long Term	0.39	ACUITE BBB- \| Stable (Assigned)
09 Oct 2024	Cash Credit	Long Term	42.50	ACUITE BBB- (Reaffirmed & Withdrawn)
	Cash Credit	Long Term	27.50	ACUITE BBB- (Reaffirmed & Withdrawn)
	Term Loan	Long Term	2.04	ACUITE BBB- (Reaffirmed & Withdrawn)
	Term Loan	Long Term	40.00	ACUITE BBB- (Reaffirmed & Withdrawn)
	Covid Emergency Line.	Long Term	7.88	ACUITE BBB- (Reaffirmed & Withdrawn)
	Covid Emergency Line.	Long Term	1.13	ACUITE BBB- (Reaffirmed & Withdrawn)
	Term Loan	Long Term	35.00	ACUITE BBB- (Reaffirmed & Withdrawn)
	Term Loan	Long Term	4.71	ACUITE BBB- (Reaffirmed & Withdrawn)
	Proposed Long Term Bank Facility	Long Term	12.64	ACUITE Not Applicable (Withdrawn)
24 Jul 2023	Cash Credit	Long Term	42.50	ACUITE BBB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	27.50	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	3.63	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	9.78	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	40.00	ACUITE BBB- \| Stable (Assigned)
	Covid Emergency Line.	Long Term	13.69	ACUITE BBB- \| Stable (Reaffirmed)
	Covid Emergency Line.	Long Term	1.30	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	35.00	ACUITE BBB- \| Stable (Assigned)
29 May 2023	Covid Emergency Line.	Long Term	13.69	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	9.78	ACUITE BBB- \| Stable (Reaffirmed)
	Term Loan	Long Term	3.63	ACUITE BBB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	27.50	ACUITE BBB- \| Stable (Reaffirmed)
	Cash Credit	Long Term	42.50	ACUITE BBB- \| Stable (Reaffirmed)
	Covid Emergency Line.	Long Term	1.30	ACUITE BBB- \| Stable (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
State Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	42.50	Simple	ACUITE BBB- \| Stable \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	47.50	Simple	ACUITE BBB- \| Stable \| Assigned
State Bank of India	Not avl. / Not appl.	Covid Emergency Line.	Not avl. / Not appl.	Not avl. / Not appl.	30 Nov 2029	5.85	Simple	ACUITE BBB- \| Stable \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Covid Emergency Line.	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2028	0.70	Simple	ACUITE BBB- \| Stable \| Assigned
State Bank of India	Not avl. / Not appl.	Forward Contracts	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	0.96	Simple	ACUITE A3 \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2027	0.20	Simple	ACUITE BBB- \| Stable \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2028	4.85	Simple	ACUITE BBB- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Aug 2027	1.38	Simple	ACUITE BBB- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	24 Mar 2034	40.00	Simple	ACUITE BBB- \| Stable \| Reaffirmed
AXIS BANK LIMITED	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2028	20.65	Simple	ACUITE BBB- \| Stable \| Assigned
AXIS BANK LIMITED	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2027	0.60	Simple	ACUITE BBB- \| Stable \| Assigned
Union Bank of India	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	03 Mar 2034	33.65	Simple	ACUITE BBB- \| Stable \| Assigned

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Archita Sharma
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@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.

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