ICRA Nepal has assigned credit ratings to Swastik Rolling Mills Private Limited, giving the company an [ICRANP] LB+ rating for its long-term loan facilities and [ICRANP] A4 rating for its short-term limits.

The ratings cover a total debt package of NPR 3,000 million and reflect a credit profile supported by operational strengths but constrained by high leverage and liquidity pressures.

High Debt Continues to Pressure Financial Profile

Swastik Rolling Mills’ credit profile remains significantly affected by its elevated debt burden.

As of mid-May 2026, the company’s total debt stood at 3.9 times tangible net worth, while its Total Debt to OPBDITA ratio was 8.2 times.

Debt servicing capacity also remained tight, with the company reporting a Debt Service Coverage Ratio (DSCR) of around 1.1 times during the first 10 months of FY2026.

The company has nevertheless improved its operating profitability. Its operating profit margin increased to 7.7% in 10MFY2026, compared with just 1.3% in FY2022.

However, the benefit of improved margins and lower borrowing costs has been largely offset by the company’s rising debt levels.

Liquidity also remains under pressure. Working capital intensity increased to approximately 26% of operating income, while drawing power utilization reached around 145% as of mid-May 2026.

Integrated Operations Provide an Advantage

Despite the financial pressures, ICRA Nepal identified several factors supporting Swastik’s credit profile.

The company operates as an integrated primary steel producer, including in-house billet manufacturing. This provides an advantage over secondary steel producers due to favorable duty protection.

Its location near the Indo-Nepal border also provides logistical benefits. The plant can import key raw materials such as sponge iron at relatively competitive costs while maintaining access to national highway networks for domestic distribution.

Swastik also benefits from an experienced promoter group with more than three decades of industry experience, with its ownership primarily associated with the RK Golchha Group. The company markets its products under the Bajrang Steel brand.

Construction Sector Exposure Remains a Risk

The company remains exposed to the cyclical nature of Nepal’s construction and real estate sectors.

ICRA Nepal also identified intense competition within Nepal’s fragmented steel industry as a key challenge. Exposure to foreign exchange movements and commodity price volatility could further affect the company’s financial performance.

Regulatory changes, particularly those affecting import tariffs and duty protections, also remain a potential source of risk for the business.

According to ICRA Nepal, Swastik Rolling Mills’ future credit rating will depend largely on its ability to sustain revenue growth, improve operating margins and reduce its debt and liquidity pressures.