Indag Rubber Ltd

Rating Action

• ICRA reaffirms Indag Rubber Limited's long-term rating at A- (Negative) and short-term at A2+.

Instruments & Ratings

• Long-term fund-based cash credit: Rs 3.40 crore; rating A- (Negative); reaffirmed.
• Short-term non-fund based bank guarantee: Rs 25.00 crore; rating A2+; reaffirmed.
• Total: Rs 28.40 crore.

Rationale

• Established tyre-retreading presence; strong brand and pan-India distribution.
• Debt-free standalone balance sheet; healthy liquidity; comfortable capital structure.
• MMSPL diversification into power conversion systems; revenue growth potential.
• FY2026: OI Rs 214.5 crore; OPBDITA Rs 9.1 crore; PAT Rs 8.1 crore; margin 4.2%.
• Q1 FY2027: MMSPL revenue Rs 12.5 crore; IRL margin 8.1%.
• Profitability remains below historical levels; negative outlook persists.

Key Financials & Liquidity

• FY2026: OI Rs 214.5 crore; PAT Rs 8.1 crore; OPBDITA Rs 9.1 crore; margin 4.2%.
• FY2025: OI Rs 228.4 crore; PAT Rs 4.7 crore; OPBDITA 0.77%.
• Debt/OPBDITA 1.99x; Interest coverage 7.62x.

Liquidity & Leverage

• Liquidity around Rs 100 crore cash and investments; unutilised cash credit Rs 3 crore.
• Capex plan Rs 9–10 crore in FY2027; MMSPL working capital up to Rs 20 crore by FY2027.

Outlook & Sensitivities

• Outlook: Negative.
• Positive: sustained scale and margins with strong liquidity.
• Negative: weaker scale/profitability; higher working capital or capex could tighten liquidity.

Material Changes Since Last Rating

• Outlook remained Negative; profitability improvement in FY2026 not fully sustainable.

Rating Agency

• Agency: ICRA Limited.

GST Show Cause Notice

• SCN under CGST/RGST Act 2017 for FY2022-23 alleging wrongly availed input tax credit.
• Tax liability and interest quantified; no material impact on finances or operations; response to be filed.

Indag Rubber Limited - Closure of Trading Window from October 01, 2026 until 48 hours after declaration of financial results for the quarter ending September 30, 2026

GST Show Cause Notice

• Show Cause Notice under KGST/CGST Act, 2017 received for FY2022-23.
• Total differential tax liability with interest and penalties: Rs 24,99,618.
• GST components: SGST Rs 40,254; CGST Rs 40,254; IGST Rs 24,19,110.
• Period: Apr 2022–Mar 2023.
• Authority: Office of the Assistant Commissioner of Commercial Taxes, Bengaluru.
• Date of receipt: September 18, 2026; delay acknowledged.
• No impact on financials or operations per disclosure.
• Company will file a response within prescribed timelines.

Transfer of unclaimed shares to IEPF

• Public notice under SEBI LODR Regulation 30 on transfer of unclaimed shares to IEPF.
• Dividend unpaid/unclaimed for seven consecutive years starting from the 2019-20 interim dividend.
• Equity shares for such unpaid dividends to be transferred to the IEPF Authority's Demat account.
• Notice available on Indag Rubber's website at indagrubber.com.
• Company Secretary & Compliance Officer: Sonal Garg, ACS-24598.
• Dated September 15, 2026.

AGM highlights

• FY2025-26 total income ~Rs225 crore; PBT Rs22.43 crore; PAT Rs12.38 crore.
• Dividend: interim Rs0.90; final Rs1.50 proposed; total Rs2.40 per equity share.
• Re-appointment of Independent Director Raj Kumar Agrawal for second 5-year term (2026-2031).
• Remuneration of Shome & Banerjee, Cost Auditors, to be ratified for FY2026-27.
• Approval for payment of Commission to Non-Executive Directors for FY2026-27, 2027-28 and 2028-29.
• FY2025-26: launched WinMaster and Retrex; EV line introduced; outlook volatile due to crude oil costs.
• Millennium Manufacturing Systems Pvt. Ltd. contributed to revenue with its first commercial order.
• Working capital cycle 70 days; receivables 32 days; payables 44 days.
• Industry outlook favorable due to road infrastructure expansion, radialization, and EV adoption.
• AGM conducted via video conference; voting results to be announced after Scrutinizer report.

Business Overview

• Tyre retreading materials and solutions with pan-India depots/retreader network.
• Diversified into Millenium Manufacturing Systems (EMS) for green energy.
• New tread ranges for EVs and LCVs broaden portfolio.
• Pan-India network: 15+ depots, 300+ dealers, 3,000 retreaders, 50+ sales/tech teams.

Operational Highlights

• Q1 FY27 revenue ₹60.4 Cr; EBITDA ₹8.2 Cr; PAT ₹5.1 Cr; gross 37.1%, PAT 8.4%.
• Precured tread rubber capacity: 20,000 MT p.a.; gum: 5,000 MT p.a.
• Millenium commenced commercial production and dispatches in Q1 FY27.
• Pan-India network expanded: 15+ depots, 300+ dealers, 3,000 retreaders.

Financial Performance

• Total revenue ₹60.4 Cr; gross profit ₹22.4 Cr; EBITDA ₹8.2 Cr; PAT ₹5.1 Cr; EPS ₹1.93.
• Gross margin 37.1%; EBITDA margin 13.6%; PAT margin 8.4%.
• YoY revenue growth 26%.

Capital Structure & Liquidity

• Consolidated equity ₹235.6 Cr; cash ₹3.6 Cr; total assets ₹278.5 Cr.
• Dividend payout maintained.

Strategic Priorities & Outlook

• Focus on price discipline and raw-material hedging via pass-through and supplier diversification.
• Millenium growth: Mohali facility; beta orders delivered; first commercial serial order FY26; Q1 production.
• EV-ready tread patterns; R&D at Nalagarh; pan-India coverage.

Risks & Mitigation

• Raw-material inflation risk; mitigated by price pass-through and supplier diversification.

Governance & Leadership

• No material governance changes; leadership includes CEO Vijay Shrinivas and directors.

Financial highlights

• Total revenue ₹60.45 crore, up 26% year-on-year.
• EBITDA ₹8.20 crore, margin 13.6%.
• PAT ₹5.07 crore, margin 8.4%.

Operational development

• Subsidiary Millenium Manufacturing Systems commenced commercial production and dispatches.

Cost dynamics

• West Asia input costs surged; management is using price pass-through and diversification.

Management focus

• Management emphasizes disciplined product mix, pricing, and channel engagement to sustain long-term value.

Other business

• Millenium Manufacturing Systems continues EMS production in the power-electronics segment.

Standalone financials

• Revenue from operations: ₹5,755.20 lakh, up ~27.9% YoY.
• Total income: ₹6,044.83 lakh, up ~26% YoY.
• Profit before tax: ₹678.39 lakh.
• Profit after tax: ₹507.49 lakh.
• EPS (basic/diluted): ₹1.93 (Q1 FY2027).

Consolidated financials

• Revenue from operations: ₹7,008.79 lakh.
• Total income: ₹7,315.13 lakh.
• Profit after tax: ₹503.86 lakh.
• EPS (basic): ₹1.93 (quarter).

Segment details

• Precured Tread Rubber segment revenue: ₹5,755.20 lakh.
• Electronics including green energy storage revenue: ₹1,253.59 lakh.
• Total segment revenue: ₹7,008.79 lakh; PBIT mix: ₹436.89 lakh ( Rubber) and ₹6.82 lakh (Electronics).