Acuite has consolidated the standalone business and financial risk profiles of S Pyarelal Ispat Private Limited (SPIPL) and Ganpati Sponge Iron Private Limited (GSIPL), collectively referred to as the ‘S Pyarelal Group’, in view of common management, strong operational and financial linkages, and similar line of business activities. This is in contrast to the earlier consolidation approach with Sambhv Steel Tubes Limited, which has been deconsolidated due to the discontinuation of operational linkages and the release of corporate guarantees given by SPIPL (release expected in Oct’25) & GSIPL (released in July’25) to SSTL.

Strong promoter group
The promoters of the group have been associated with the iron & steel industry for over three decades. The promoter companies have integrated operations with capacities to produce sponge iron, steel billets and long products. Further, the promoters infused Rs 4.93 Cr. in FY25 to support the debt servicing.
Acuite believes that the long-standing experience of promoters in the industry and financial aids shall benefit the group. 

Efficient working capital management
The working capital operations of the group is efficient in nature marked by gross current assets (GCA) of 70 days as on 31st March 2025(Prov.) (68 days as on 31st March 2024). The inventory holding period stood at 25 days as on 31st March 2025(Prov.) (26 days as on 31st March 2024). Further, the debtor period also stood comfortable at 16 days on 31st March 2025(Prov.). Therefore, average utilization of working capital limits remained moderate with average utilisation of fund-based limits at ~ 54.68% over the last six months ending July 2025, and non-fund-based limit utilisation at ~38.33% during the same period.

Declining scale of operations with low realizations and thin margins
The group's capacity utilisation and sales realisations moderated during FY2025, resulting in a decline in revenue to Rs. 811.48 Cr. (Prov.) from Rs. 895.72 Cr. in FY2024. The EBITDA margin also declined to 2.23% in FY2025 (Prov.) from 2.97% in FY2024, due to lower sales realisations and an increase in power costs. Both the companies primarily manufacture commercial-grade products, which typically yield lower margins.
Going forward, improvement in production & sales volumes coupled with realisation growth shall be a key rating monitorable.

Moderate financial risk profile
The tangible net worth of the group reduced to Rs. 109.95 Cr. as on March 31, 2025(Prov.) as against Rs. 111.07 Cr. on March 31, 2024 owing to losses incurred during the year. Further, the gearing remained moderate at 1.00 times in FY2025 (Prov). The debt protection metrics also stood weak with interest coverage ratio (ICR) of 1.31 times in FY2025(Prov.) (3.45 times in FY2024) and debt service coverage ratio (DSCR) of 0.77 times in FY2025(Prov.) (1.78 times in FY2024).
Going forward, significant increase in debt levels or generation of inadequate cash accruals thereby impacting the financial risk profile shall be a key rating sensitivity.

Intense competition and inherent cyclical nature of the steel industry
The downstream steel industry remains heavily fragmented and unorganised. Therefore, the group is exposed to intense competitive pressures from large number of organised and unorganised players along with its exposure to inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature causing an adverse impact on the profitability of the group.