Jay Jagdamba Limited (JJL)

August 29, 2023

Ratings
Amount Rating Complexity
Instrument / Facility Ratings
(Rs. crore) Action Indicator
Long term fund-based 390.50
IVR BBB+/ Stable
Bank facility – (Enhanced
(IVR Triple B Plus with Reaffirmed Simple
CC/PC/PCFC from
/PSC/FDBP Stable Outlook)
380.50)
135.17
Long term fund-based IVR BBB+/ Stable
(Reduced
Bank facility – Term (IVR Triple B Plus with Reaffirmed Simple
from
Loans Stable Outlook)
156.95)
Long term fund-based 104.56*
IVR BBB+/ Stable
Bank facility – (Reduced
(IVR Triple B Plus with Reaffirmed Simple
Working Capital Term from
Loans Stable Outlook)
121.91)
Long term fund-based 150.00 IVR BBB+/ Stable
Bank facility – (Enhanced
(IVR Triple B Plus with Reaffirmed Simple
Proposed from 10.00) Stable Outlook)
Short term non-fund
based Bank facility – 19.50 IVR A2 Reaffirmed Simple
LC/BG
Total 799.73
*The WCTL includes loans under GECL scheme.

Details of Facilities are in Annexure 1

Detailed Rationale
The rating reaffirmation to the bank facilities of Jay Jagdamba Limited (JJL) continuous to
derive comfort from extensive experience of promoters in stainless steel industry, technical
expertise to manufacture diversified product profile used in diverse end-user industries,
healthy growth in operation and moderate gearing and debt coverage indicators. However,
these rating strengths remain constrained by working capital intensive operations, profitability
exposed to volatility in raw material prices and foreign exchange fluctuations and exposure to
cyclicality associated with steel industry.

Key Rating Sensitivities:

Upward Factors
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 - Continuing its operating growth and margins would be crucial for the company to
improve its liquidity position.
- Significant improvement in debt protection matrix.

Downward Factors
- Any deviation from the projected top-line and margins would put a stress on financial
profile of the company and call for a negative rating action.
- More delay in the expansion project, overruns the cost are the key rating monitorable

List of Key Rating Drivers with Detailed Description

Key Rating Strengths

Extensive Experience of Promoters in Stainless Steel Industry

Jay Jagdamba group is being led by Mr. Ram Prakash Maplani & Mr. Narayan Prasad Malpani
both having extensive experience in stainless steel industry. The company stands to benefit
in terms of managing its operations and retaining and nurturing its relationships with important
clients from this vast experience of its promoters, who are also supported by a team of qualified
and experienced management team.

Technical expertise to manufacture diversified product profile used in diverse end-user

industries:
Jay Jagdamba Group has a diversified product portfolio comprising of SS Billets, Ingots, hot
rolled steel, bright round, angle bars & flanges etc. The company is catering to varied key
sectors like Automotive, Chemical, Defence, Machine building, Oil & Gas, Petrochemical,
Energy & Power and Railways and so on. This enables the company to reap benefits of
conglomeration and considerably insulate itself from any sectoral volatility.

Healthy growth in operation

The company witnessed a healthy growth in operation with increase of about ~35% in
turnover to Rs.1,430 Crore in FY23 (Prov.) from Rs.1,046 Crore in FY22 due to increase in
volume coupled with increased average sales realization.

Moderate gearing and debt coverage indicators

2
The capital structure of the company remained moderate with overall gearing and long debt-
equity of 1.36x and 0.58x as on 31st March 2023 (Prov.) compared to 1.23x and 0.46x as
on 31 March 2022 respectively. The financial risk profile of the company is moderate
marked by healthy net worth, debt protection metrics and debt coverage indicators. The
adjusted net worth of company stood at Rs.543.96 Crores as on 31 March 2023 (Prov.) as
against Rs.495.76 Crore as on 31 March 2022.

Key Rating Weaknesses

Working Capital Intensive Operations
The average collection period for JJ group was around ~90 days and average inventory days
stood at ~117 in FY2023 (Prov.). This implies working capital-intensive operations where
much of the company cash is locked up in inventory and with the customers. On average, the
company takes around 63 days to pay its suppliers and thus the cash conversion cycle for the
company was at a high of 143 days in FY2023 (Prov.).

Profitability exposed to volatility in raw material prices and foreign exchange

fluctuations:
JJ group profitability is exposed to fluctuations in raw material prices, which forms a significant
percentage of the average selling price. The raw material consumptions constitute around
~75% of total expenses Thus, the Company’s profitability is exposed to fluctuations in raw
material prices. Further, as a company also has its presence in export market . The group
operations remain exposed to fluctuations in foreign currency rates. However, the Company
has a pre-defined hedging mechanism to mitigate the risk.

Exposure to cyclicality associated with steel industry

The steel industry is sensitive to the shifting business cycles including changes in the general
economy, interest rates and seasonal changes in the demand and supply conditions in the
market. Further, its operations are vulnerable to any adverse change in demand-supply
dynamics in the construction sector.

Analytical Approach: Combined Approach

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Infomerics has taken combined approach of evaluation by combining the financial results of
Jay Jagdamba Limited (JJL), Jay Jagdamba Profile Pvt Ltd (JJPPL), Jay Jagdamba Forgings
Pvt Ltd (JJFPL) and Shree Jay Jagdamba Flanges Pvt Ltd (SJJFPL) collectively referred to
as the Jay Jagdamba group, as the companies are in same line of business having common
management and significant operational & financial linkages.

Applicable Criteria:
Rating Methodology for Manufacturing Companies
Financial Ratios & Interpretation (Non- Financial Sector)
Criteria on Rating Outlook
Criteria on Combined approach

Liquidity – Adequate
The liquidity position of the company remains adequate as cash accruals are expected to
remain sufficient to meet the repayment obligations. Further, the company had gross cash
accruals of INR 78.62 Crore in FY23 (Prov.). The overall utilisation of the fund-based limits
stood moderate during the last 12 months ended March 2023. The current ratio stood at 1.24
times as on 31st March 2023 (Prov.).

About the Company

Jay Jagdamba Limited (JJL) is a public company domiciled in India. Incorporated in January
2004, the company is into manufacturing of stainless steel and allied products like - alloy steel,
billets, ingots, hot rolled steel, bright round, angle bars & flanges etc. The manufacturing facility
is at Wada in Maharashtra. Jay Jagdamba Profile Private Limited (JJPPL) - a subsidiary of
Jay Jagdamba Limited, JJPPL was incorporated in 2006 (earlier MG Multitrade Pvt Ltd) The
company has a plant at Wada to manufacture SS angles, flat bars, and channels. Jay
Jagdamba Forgings Private Limited (JJFPL) - is a group company which is into manufacturing
of SS forgings. Shree Jay Jagdamba Flanges Private Limited (SJJFPL) - incorporated in 2014,
is into manufacturing of stainless-steel flanges with its plant at Wada.

Financials (Combined):
INR in Crore

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 31-03-2022 31-03-2023
For the year ended/ As on*
(Audited) (Provisional)
Total Operating Income 1,046.82 1,430.35
EBITDA 112.42 148.27
PAT 33.74 47.00
Total Debt 611.21 742.11
Tangible Networth 495.76 543.96
EBITDA Margin (%) 10.74 10.37
PAT Margin (%) 3.17 3.27
Overall Gearing Ratio (x) 1.23 1.36
* Classification as per Infomerics' standards

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating History for last three years:

Current Ratings (Year Rating History for the past 3
2023-24) years
Date(s Date(s Date(s Date(s
Sr )& )& )& )&
Name of
. Amount Rating Rating Rating Rating
Instrument/Facil
N outstand Rati (s) (s) (s) (s)
ities Type
o. ing (Rs. ng assign assign assign assign
Crore) ed in ed in ed in ed in
2023- 2022- 2021- 2020-
24 23 22 21
IVR
BBB-
/INC
(June
24,
IVR IVR 2021)
IVR
BBB+/ BBB+/ IVR
BBB
CC/PC/PCFC/PS Long Stable Stable BBB/
1 390.5 +/ -
C/FDBP Term (April (June Stable
Stabl
26, 02, (July
e
2023) 2022) 15,
2021)
IVR
BBB/
Stable
(Aug

5
 03,
2021)

IVR
BBB-
/INC
(June
24,
2021)
IVR IVR IVR
IVR
BBB+/ BBB+/ BBB/
BBB
Long Stable Stable Stable
2 Term Loan 135.17 +/ -
Term (April (June (July
Stabl
26, 02, 15,
e
2023) 2022) 2021)
IVR
BBB/
Stable
(Aug
03,
2021)
IVR IVR IVR
IVR
BBB+/ BBB+/ BBB/
BBB
Long Stable Stable Stable
3 WCTL 104.56 +/ -
Term (April (June (Aug
Stabl
26, 02, 03,
e
2023) 2022) 2021)
IVR IVR IVR
IVR
BBB+/ BBB+/ BBB/
Long Term BBB
Long Stable Stable Stable
4 Proposed Bank 150 +/ -
Term (April (June (Aug
Facilities Stabl
26, 02, 03,
e
2023) 2022) 2021)
IVR
A3+-
/INC
(June
24,
IVR A2 IVR A2 2021)
Short IVR (April (June IVR
5 LC/BG 19.5 -
Term A2 26, 02, A3+
2023) 2022) (July
15,
2021)
IVR
A3+
(Aug

6
 03,
2021)

Name and Contact Details of the Rating Analyst:

Name: Mr. Prakash Kabra
Tel: (022) 62396023
Email: prakash.kabra@infomerics.com

About Infomerics:
Infomerics Valuation and Rating Private Ltd (Infomerics) was founded in the year 1986 by a
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Disclaimer: Infomerics ratings are based on information provided by the issuer on an ‘as is where is’ basis.
Infomerics credit ratings are an opinion on the credit risk of the issue / issuer and not a recommendation to buy,
hold or sell securities. Infomerics reserves the right to change, suspend or withdraw the credit ratings at any point
in time. Infomerics ratings are opinions on financial statements based on information provided by the management
and information obtained from sources believed by it to be accurate and reliable. The credit quality ratings are not
recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any
security. We, however, do not guarantee the accuracy, adequacy or completeness of any information, which we
accepted and presumed to be free from misstatement, whether due to error or fraud. We are not responsible for
any errors or omissions or for the results obtained from the use of such information. Most entities whose bank
facilities/instruments are rated by us have paid a credit rating fee, based on the amount and type of bank
facilities/instruments. In case of partnership/proprietary concerns/Association of Persons (AOPs), the rating

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assigned by Infomerics is based on the capital deployed by the partners/proprietor/ AOPs and the financial strength
of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans
brought in by the partners/proprietor/ AOPs in addition to the financial performance and other relevant factors.

Annexure 1: Details of Facilities

Size of Rating
Date of Coupon Maturity
Name of Facility Facility Assigned/
Issuance Rate/ IRR Date
(Rs. Crore) Outlook
Long Term Fund
Based Facilities –
- - - 390.50 IVR BBB+/ Stable
CC/PC/PCFC
/PSC/FDBP
Long Term Fund
Based Facilities – - - - 135.17 IVR BBB+/ Stable
Term Loan
Long Term Fund
Based Facilities – - - - 104.56 IVR BBB+/ Stable
WCTL
Long Term Fund
- - - 150.00 IVR BBB+/ Stable
Based (Proposed)
Short term Non-
fund-based Bank - - - 19.50 IVR A2
facility – LC/BG

Annexure 2: List of companies considered for consolidated analysis:

Sr. No Companies Extent of Consolidation (%)
1. Jay Jagdamba Limited 100
2. Jay Jagdamba Profile Pvt. Ltd. 100
3. Jay Jagdamba Forging Pvt. Ltd. 100
4. Shree Jay Jagdamba Flanges Pvt. Ltd. 100

Annexure 3: Facility wise lender details

https://www.infomerics.com/admin/prfiles/len-JJL-aug23.pdf

Annexure 4: Detailed explanation of covenants of the rated instrument/facilities: Not

Applicable

Note on complexity levels of the rated instrument: Infomerics has classified instruments
rated by it on the basis of complexity and a note thereon is available at www.infomerics.com.