| Siyaram Recycling Industries Limited | ||||||
| Long-term rating reaffirmed at 'CRISIL BB/Stable'; 'CRISIL A4+' assigned to short-term bank debt; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL A4+’ rating to the short-term bank facilities of Siyaram Recycling Industries Ltd (SRIL) and reaffirmed its ‘CRISIL BB/Stable’ rating on the long-term bank facilities of the company.
The ratings continue to reflect the extensive experience of the promoter in the brass industry and diversified client base with longstanding relationship with customers, above-average financial risk profile and moderate scale of operations. These strengths are partially offset by large working capital requirement and susceptibility of operating margin to fluctuations in raw material prices and foreign exchange (forex) rates. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the promoter and diversified clientele The promoter has been associated with the brass industry since 1987 through its group company, Siyaram Metal Udyog Pvt Ltd. This extensive experience led to the introduction of new products and healthy scale-up of business operations, as reflected in revenue of Rs 413.63 crore in fiscal 2024. The company serves a diversified client base encompassing a wide array of industries such as manufacturers in the sanitary and bathware sector, pipes and plumbing sector and electrical items. It also sells products to metal dealers and traders. The company generally does not enter into long-term agreements with customers; however, it has developed longstanding relationships with customers, some of whom have been with the company for more than five years.
Above-average financial risk profile The capital structure have been moderate due to lower reliance on external funds yielding gearing of 0.80 time and low total outside liabilities to adjusted networth ratio of 1.25 times as on March 31, 2024. The company has further raised equity in the current fiscal; further strengthening leverage levels. Debt protection metrics may continue to be healthy due to moderate leverage and adequate profitability. The interest coverage ratio is estimated at 2.72 times and net cash accrual to total debt ratio at 0.15 time for fiscal 2024.
Moderate scale of operations Revenue increased at a compound annual growth rate of almost 44% for the past three fiscals and is reported at about Rs 413.63 crore in fiscal 2024, against Rs 495.36 crore in fiscal 2023. Almost 65% of the revenue is derived from trading of brass scrap and the remaining 35% from the manufacturing segment. With over 50-55% of unutilised capacities, the company will be able to improve its scale of operations, and thus revenue, over the medium term.
Large working capital requirement Gross current assets have been 78-140 days over the past three fiscals and were 140 days as on March 31, 2024, driven by debtors of 26 days and inventory of 110 days. The company has to extend moderate credit period, in line with the industry standards, as, customers are small and medium-sized players who require credit. Furthermore, to meet business requirement, it holds huge raw material, work in process and finished goods inventory considering long transit time as major requirement of raw material is imported from multiple geographies across the world.
Susceptibility of the operating margin to fluctuation in raw material prices and forex rates Brass prices remain highly volatile as they depend on demand-supply in the international as well as domestic markets. Further, since a part of revenue comes from the international market, any sharp fluctuation in forex rates affects realisations and cash accrual. Further, the margin is modest as almost 60-65% of the revenue is derived from trading of scarp brass. The margin is estimated at 4.4% in fiscal 2024, against 3.4% in fiscal 2023. |
Liquidity: Stretched Bank limit utilisation was 99.9% for the 12 months through August 2024. Cash accrual is expected at Rs 14-18 crore, against yearly debt obligation of Rs 1-4 crore over the medium term. Current ratio stood at 1.74 times on March 31, 2024. Low gearing and moderate networth should partially aid liquidity. |
Outlook: Stable SRIL will continue to benefit from the extensive experience of its promoter and his established relationship with clients. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company SRIL, formerly known as Siyaram Impex Pvt Ltd, was incorporated in 2008 and is promoted by Mr Ramgopal Maheshwari. The company manufactures copper alloy (brass) ingots and billets at its facility in Jamnagar, Gujarat. |
Key Financial Indicators
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Status of noncooperation with previous CRA SRIL had not cooperated with Brickwork Ratings India Pvt Ltd (BWR), which classified it as non-cooperative vide release dated November 09, 2023. The reason provided by BWR was non-furnishing of information for monitoring of ratings. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
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Criteria Details
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