RATING RATIONALE
27Feb2023

Uflex Ltd.

Brickwork Ratings places the rating of the Bank Loan Facilities aggregating Rs.440Crores of Uflex Ltd. on Rating Watch with Negative Implications, based on a Material Event.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(05 Apr 2022)
Present
Fund Based 440.00 440.00 Long Term BWR AA- /Stable
Assignment
BWR AA - /Rating Watch with Negative Implications
Grand Total 440.00 440.00 (Rupees Four Hundred Forty Crores Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
*** Note- The company has given part mandate to BWR for sanctioned TL only


RATING ACTION / OUTLOOK

Brickwork Ratings has placed the existing long term ratings of BWR AA- of Uflex Ltd (UL or ‘the Company’) for the Bank Loan Facilities aggregating Rs.440Crores (INR Four Hundred Forty Crore Only) on Rating Watch with Negative Implications following recent media articles with regard to raid/search conducted by the Income Tax Department (ITD) across various locations/offices of the Group on 21 February, 2023. BWR is in discussion with the company’s management to understand the nature and implications of this event on the business and financial risk profiles of the company and its outcome.

Thus rating has been placed on Rating Watch with Negative Implications pending further developments in the above matters. BWR will remove the ratings from watch and take appropriate rating action once it has clarity on these aspects on the business and financial profile of Uflex. For further details, please refer to the detailed rating rationale of Uflex Ltd. and refer Link to BWR policy for placing ratings on watch  

Meanwhile, BWR observes that the company has submitted its clarification to BSE on 27 February 2023 informing as follows :

Quote ''This is with reference to clarification sought by the Stock Exchange(s) from the Company on the captioned subject; we would like to inform you that the Search Operations by the Income Tax Department was carried out at various locations related to the Company from February 21, 2023 to February 27, 2023 (Morning). Further, as a responsible Company all the concerned employees/staff of the Company extended their full cooperation to the Income Tax Officials. Presently, we do not foresee any material impact of the said Search Operations by the Income Tax Department on the Company’s current or future business operations. Any further impact with respect to search will be intimated.” Un-Quote

KEY RATING DRIVERS

ANALYTICAL APPROACH - Consolidated

BWR has taken a consolidated approach for Uflex and its subsidiaries to arrive at the ratings, on account of the operating and strategic linkages among them.

 

RATING SENSITIVITIES

Please refer to the Rating Sensitivities of the previous rationale through the link Uflex 5 April 2022

LIQUIDITY INDICATORS - Adequate

On a consolidated basis the company had registered cash accruals of Rs.1618Crs in FY22 against a minimal repayment of Rs.424Crs in FY22 and expected cash accruals at around Rs.1874Crs in FY23 against debt obligations of approximately Rs.495Crs. As per the unaudited consolidated results for H1FY23 the company has already reported cash accruals of ~Rs.858Crs which is sufficient to meet the debt obligations for current fiscal year. The cash and cash equivalents of the company stood at Rs.665Crs as on 30 Sep 2022 which has increased from Rs.588Crs as on 31 March, 2022. The company has reported a moderate current ratio of 1.64x in FY22 on a consolidated basis.

 

ABOUT THE ENTITY

Promoted and founded in 1985 by Mr. Ashok Chaturvedi, a first generation entrepreneur, is having its Corporate Office located at Noida, UP. It was previously known as Flex Industries. Another Group Company Flex Packaging was merged into Flex Industries to form the now known Uflex Limited.It is engaged in providing end-to-end flexible packaging solutions to customers viz. packaging design & colour scheme, packaging structure, packaging products (value added anti-counterfeiting solutions to prevent look alike from eroding the brand equity. The company has effectively utilised backward and forward integration to hold a strong market position.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 5673.78 4633.35
EBITDA Rs.Crs. 616.09 720.68
PAT Rs.Crs. 222.32 230.44
Tangible Net Worth Rs.Crs. 2655.29 2438.41
Total Debt/TNW Times 0.64 0.51
Current Ratio Times 1.38 1.41
KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 13127.13 8888.90
EBITDA Rs.Crs. 2160.39 1800.00
PAT Rs.Crs. 1099.42 843.68
Tangible Net Worth Rs.Crs. 6665.73 5515.05
Total Debt/TNW Times 0.68 0.72
Current Ratio Times 1.64 1.57

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2023) 2022 2021 2020
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 440.00
BWR AA-/Rating Watch with Negative Implications
(0)
05Apr2022
BWR AA- Stable
(Assignment)
NA
NA
NA
NA
Grand Total 440.00 (Rupees Four Hundred Forty Crores Only)
*** Note- The company has given part mandate to BWR for sanctioned TL only COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Akanksha

Senior Rating Analyst akanksha@brickworkratings.com

Ravi Rashmi Dhar

Associate Director - Ratings ravi.d@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Uflex Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Name of the Bank/Lender Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Bank of Bahrain and Kuwait Term LoanSanctioned 50.00 _ 50.00
2 Indian Overseas Bank Term LoanSanctioned 100.00 _ 100.00
3 Punjab National Bank Term LoanSanctioned 290.00 _ 290.00
Total 440.00 0.00 440.00
TOTAL (Rupees Four Hundred Forty Crores Only)
* Note- The company has given part mandate to BWR for sanctioned TL only

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