What is a credit rating report?
A credit rating is an agency's opinion on how likely a borrower is to repay its debt on time. The report that explains the rating is called a rationale, or a rating press release.
This guide reads one of them: CARE Ratings' press release on Kalyani Steels, dated 4 Dec 2024.[S1] Kalyani Steels makes special steels in Karnataka, mostly for car and forging companies.
CARE describes itself as registered with SEBI. Its disclaimer says the rating is not a recommendation to buy, sell or hold any security.[S1]
So a rating speaks about a company's debt, not its shares. That makes it useful for learning. It is an outside analyst's view of the business, with no view on the share.
What does the rating table at the top say?
The first page opens with a table. Each row is one kind of borrowing, with its size, its rating and what changed.[S1]
In the filing · Page 1
Long Term Bank Facilities ₹276.75 crore (reduced from ₹331.99 crore) · CARE AA; Stable · Reaffirmed[S1]
Long-term bank loans and credit lines. "AA" is the rating symbol. "Stable" is the outlook, explained below. "Reaffirmed" means CARE kept the rating where it was.
In the filing · Page 1
Short Term Bank Facilities ₹600.00 crore (enhanced from ₹500.00 crore) · CARE A1+ · Reaffirmed[S1]
Short-term facilities, such as working-capital lines and bank guarantees. They use a separate short-term scale, which is why the symbol looks different.
In the filing · Page 1
Commercial Paper ₹75.00 crore · CARE A1+ · Reaffirmed[S1]
Commercial paper is short-term borrowing from investors, repaid within a year. A footnote points to CARE's website for what each symbol means.
What are the key rating drivers?
The section "Rationale and key rating drivers" is the summary. Read it first, because the rest of the report expands on it.[S1]
On the plus side, CARE cites its promoter, the Pune-based Kalyani Group, and its four-decade record. It also cites what it calls a strong financial risk profile. It says sales to group companies made up around 55–60% of net sales.[S1]
On the minus side, CARE lists exposure to raw-material prices and exchange rates, and no captive iron ore or coal mines. It also notes the car industry made up around 80% of sales.[S1]
In the filing · Page 1
PBILDT/Tonne Around ₹10,300 average (FY14 to FY24); ₹14,497 in FY24[S1]
PBILDT is profit before interest, lease rentals, depreciation and taxation: CARE's version of EBITDA. Dividing by tonnes sold lets you compare years when steel prices moved a lot.
The same section mentions a memorandum of understanding with the Government of Odisha. CARE says any large debt-funded spending under it would be a "key rating monitorable", a factor it will track.[S1]
What would make the rating change?
In the filing · Page 2
Negative factors PBILDT below ₹8,000/tonne on a sustained basis; overall gearing of 1.0x or more[S1]
These are the agency's triggers for a review, not forecasts. The list also includes a weaker credit profile at group companies and slower collection of money owed by them.
In the filing · Page 2
Positive factors A large and sustained rise in scale of operations[S1]
CARE ties an upgrade to bigger operations, along with better credit profiles at the group companies Kalyani Steels trades with.
What do "analytical approach" and "outlook" mean?
In the filing · Page 2
Analytical approach Standalone, with group linkages considered[S1]
CARE rated Kalyani Steels on its own accounts. It still took into account its links with group companies, because they are its main customers.
In the filing · Page 2
Outlook Stable[S1]
The outlook is the agency's view of where the rating may head. CARE linked "Stable" to expected steady operations and cash flow.
What do the strengths and weaknesses sections add?
Pages 2 and 3 expand each driver with detail you rarely find elsewhere. For example, CARE says the Kalyani Group took around 55.51% of net sales in FY24.[S1]
It also breaks down raw-material costs. Coal, coke and coking coal made up around 50–60% of raw-material cost, and iron ore around 20%.[S1]
On currency risk, CARE notes that around 75% of foreign-exchange exposure was hedged as on 30 Nov 2024. Hedging means fixing an exchange rate in advance with a contract.[S1]
How does the agency measure debt?
In the filing · Page 3
Debt-to-equity ratio and overall gearing (including LC backed creditors) 0.10x and 0.39x (31 Mar 2024)[S1]
Two debt ratios on the same date. Overall gearing also counts suppliers paid through letters of credit, a bank-backed promise to pay. That is why gearing comes out higher than plain debt-to-equity.
In the filing · Page 3
PBILDT interest coverage 15.01x (FY24); 8.70x (FY23)[S1]
How many times operating profit covers interest costs. A higher number means interest takes a smaller share of profit.
Rating agencies define ratios their own way. An agency's figure is best compared with the same agency's figures for other years.
What does "Liquidity: Strong" mean?
In the filing · Page 3
Liquidity Strong[S1]
Liquidity is the cash and credit a company can use quickly to pay bills. CARE points to free cash and bank balances, few loan repayments due and mostly unused credit lines.
CARE puts the free cash and bank balance at ₹589.36 crore as on 30 Sep 2024. Average use of fund-based working-capital lines was around 7% in the twelve months to October 2024.[S1]
What is in the back pages?
Page 5 has a short table of financials, marked "A" for audited years and "UA" for unaudited periods. Total operating income was ₹1,960.32 crore for FY24 (audited) and ₹953.57 crore for April to September 2024 (unaudited).[S1]
The annexures list each facility, the rating history for three years and each instrument's complexity level. The history shows CARE AA; Stable on the long-term facilities in December 2022 and December 2023 too.[S1]
Where do you find rating reports, and how does Cityfort use them?
Rating agencies publish rationales on their own websites, by company name. Each rationale carries a date, and a later rating action gets a new one.
Cityfort's Kalyani Steels stock page shows the rating in "Governance signals": CARE Ratings AA (long-term); A1+ (short-term), outlook Stable (4 Dec 2024). Its debt-to-equity comes from the company's own balance sheet instead: 0.23 (31 Mar 2026).