Shyam Metalics & Energy Limited (SMEL), a leading integrated multi-metal producer in India, has received a significant boost to its credit profile. CRISIL Ratings has upgraded the company's long-term credit rating to 'CRISIL AA+/Stable' from 'CRISIL AA/Positive', while reaffirming its short-term and commercial paper ratings at 'CRISIL A1+'.

Key Highlights of the Rating Upgrade

• The upgrade covers total bank loan facilities of Rs 3,600 crore.
• CRISIL's rating action reflects SMEL's strong financial profile, prudent capital structure, robust liquidity, operational efficiencies, and consistent business growth.
• The company reported a consolidated EBITDA of Rs 1,868 crore with an EBITDA per tonne of Rs 4,797.
• CRISIL expects the blended consolidated EBITDA per tonne to increase to more than Rs 5,000 in the future.

Financial Strength and Operational Excellence

SMEL has demonstrated impressive financial metrics, showcasing its robust financial health:

The company maintains strong financial metrics with a total outside liabilities to tangible net worth ratio of 0.45 times and an interest coverage ratio of over 14 times.

Expansion Plans and Future Outlook

SMEL has outlined growth plans:

• The group plans capital expenditure of Rs 6,500-7,000 crore over the next three years.
• This expansion is expected to be funded through internal accruals, highlighting the company's strong cash generation capabilities.
• The company aims to increase its total combined capacity to 21 MTPA, focusing on value-added products and diversification.

Product Diversification and Market Position

SMEL's product mix demonstrates its diversified portfolio:

• Pellets: ~4.2% of sales
• Sponge iron: ~14.5%
• Carbon steel: ~47.8%
• Ferro alloys: 11.6%
• Stainless steel: ~7.5%
• Aluminium foils: ~4.8%
• CR coil: 2.7%
• Pig iron: 5.5%

The company's strategic focus on increasing the share of finished and value-added products is expected to drive future growth and profitability.

Operational Efficiency and Integration

SMEL's operations benefit from:

• Integrated presence across the steel value chain
• Captive power and waste heat recovery plants
• Coal washery and railway sidings
• Low power costs with captive power contributing ~80% of requirements

These factors contribute to SMEL's cost efficiency and operational excellence.

Conclusion

The CRISIL AA+/Stable rating underscores Shyam Metalics and Energy Limited's strong position in the Indian steel sector. With its robust financial profile, strategic expansion plans, and focus on operational efficiency, SMEL is well-positioned for sustained growth in the competitive metal industry. Investors and stakeholders can take confidence in the company's solid foundation and promising outlook.

Shyam Metalics & Energy Limited (SMEL) has announced a significant move in its corporate structure. The company's material wholly-owned subsidiary, Shyam Sel and Power Limited (SSPL), has acquired complete ownership of Star Metalworks Private Limited (SMWPL). This acquisition marks a strategic expansion within the Shyam Metalics group.

Key Details of the Acquisition

Impact and Strategic Implications

1. Subsidiary Status: Following this acquisition, SMWPL has become a wholly-owned subsidiary of SSPL and a step-down subsidiary of Shyam Metalics and Energy Limited.

2. Industry Alignment: SMWPL operates in the manufacturing of various metals, including iron and steel products, which aligns with SMEL's core business.

3. Expansion of Manufacturing Capabilities: The acquisition is expected to enhance SMEL's manufacturing facilities for various metal and steel products.

4. Related Party Transaction: The acquisition falls under the category of a related party transaction, as the sellers are part of the promoter group of Shyam Metalics and Energy Limited.

About Star Metalworks Private Limited

• Incorporation: July 20, 2022
• Business Status: Yet to commence operations
• Authorized Capital: ₹10,00,000
• Paid-Up Capital: ₹1,00,000

Regulatory Compliance

The acquisition has been executed in compliance with SEBI regulations, including the Listing Obligations and Disclosure Requirements. SMEL has duly informed the stock exchanges about this development, adhering to the transparency norms set by regulatory authorities.

This strategic move by Shyam Metalics and Energy Limited, through its subsidiary, underscores the company's focus on strengthening its position in the metal manufacturing sector. As SMWPL begins its operations, it is expected to contribute to the group's overall production capabilities and market presence in the steel and metal products industry.