Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 54.20 Crs. of Conifer Industries Pvt. Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (02 Jan 2023) |
Present | ||
Fund Based | 53.94 | 49.20 | Long Term |
BWR BBB- /Stable
Reaffirmation/ISSUER NOT COOPERATING* |
BWR BBB -
/Stable removal from ISSUER NOT COOPERATING* category/Reaffirmed |
Non Fund Based | 5.00 | 5.00 | Short Term |
BWR A3
Reaffirmation/ISSUER NOT COOPERATING* |
BWR A3
removal from ISSUER NOT COOPERATING* category/Reaffirmed |
Grand Total | 58.94 | 54.20 | (Rupees Fifty Four Crores and Twenty lakhs Only) |
Brickwork ratings reaffirms the long term rating to BWR BBB/stable/ and reaffirms short-term rating to A3 of Conifer Industries Pvt Ltd. BWR took up with the issuer to provide required information over emails and through telephonic communication. The entity has provided the complete information. As we have received the FY22 financials, Satisfactory Banker Feedback Hence reaffirmed the rating and removes it from Issuer not coperating category.
KEY RATING DRIVERSCredit Strengths:
The Company is promoted by Kolkata based Maskara family and is part of the Mahabir Group having presence in the textile industry for more than eight decades. The group is mainly engaged in manufacturing jute, cotton yarn and synthetic spun yarn. Apart from textile, the group also has a presence in the healthcare services and real estate development industry.
The Company also benefits from qualified and experienced management which has helped the Company to get repeated orders from its customers.
The spinning unit of the company is located near the cotton growing areas of Gujarat at Ahmedabad. Hence, the Company benefits from low transportation cost and easy access to quality cotton because of its proximity to raw material sources.
The Company also benefits from funding support provided by the promoters and directors in the form of unsecured loans and equity infusion to meet the working capital requirements, shortfall if any in repayment obligations and capacity expansion plans.
It faces intense competition in the commoditized cotton yarn industry, characterized by minimal product differentiation and a fragmented nature, which restricts pricing flexibility and constrains benefits arising out of economies of scale.
The cotton crop, being an agri-commodity, is dependent on the weather conditions and also susceptible to plant pests and disease leading to volatility in cotton prices. Consequently, the profitability margins of the company are largely affected by the raw material price fluctuation, which in turn affects the sales realisation for cotton yarn. Any adverse movement in the price of cotton could have an adverse impact on the company’s profitability margins, as the company may not be able to pass on the price hike to its customers owing to intense competition in the industry.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). BWR has principally relied upon the standalone audited financials up to FY22, publicly available information and clarification/information provided by the Company.
RATING SENSITIVITIES
Positive:
Negative:
Net cash accruals in FY 22 is at Rs.23.20 crs and a net cash accrual to total debt has improved significantly to 0.8 as at FY22 as compared at 0.32 as at FY21
The current ratio is comfortable at 2.73 times as on 31st March 2022. Further, the Company’s average working capital limit utilization stood at around 18 percent.
ISCR ratio improved to 8.83 times for FY 2022 as against 6.64 times in FY 2021. Further, the DSCR stood at 2.05 times for FY2022 as against 1.5 times in FY 2021. The improvement in the coverage indicators are on account of improvement in profit and decline in annual debt repayment. The rise in the prices of cotton yarn also played a significant part in the improvement of coverage indicators during FY22.
ABOUT THE ENTITYConifer Industries Private Limited was incorporated in the year 2013 with a registered office located in Kolkata, West Bengal by Kolkata based Maskara family. The Company has set-up a spinning unit in Ahmedabad, Gujarat and commenced its operations in November 2016. The Company is engaged in spinning cotton yarn with a count between 30s to 40s of different varieties i.e. carded, combed and compact yarn mainly used for manufacturing fabrics for Shirt & Suitings. The Company has a total installed capacity of 25,536 spindles for manufacturing 5,300 tonnes of cotton yarn per year. The average capacity utilisation was around 72 percent during FY 2021-22. The key raw material required is cotton and mainly procured from ginning units and traders mainly located in Gujarat. The Company mainly caters to fabric manufacturing companies and traders located in Gujarat, Rajasthan and Uttar Pradesh. The Company is also engaged in deemed export which constitutes around 50% of total sales. The Company is part of the Mahabir group engaged in manufacturing jute and synthetic spun yarn. However, apart from the common management CIPL does not have any intercompany transactions with Mahabir group companies.The cotton yarn proces withnessed a substantial rise due to pent up demand during FY22.However sustainibility is to be ascertained.
KEY FINANCIAL INDICATORS (Standalone)
Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
FY 22-23 (Audited - Midterm_Annual) |
---|---|---|---|---|
Operating Revenue | Rs.Crs. | 177.11 | 93.99 | Not Available |
EBITDA | Rs.Crs. | 29.31 | 16.05 | Not Available |
PAT | Rs.Crs. | 13.37 | 2.88 | Not Available |
Tangible Net Worth | Rs.Crs. | 34.30 | 23.74 | Not Available |
Total Debt/TNW | Times | 1.15 | 2.05 | Not Available |
Current Ratio | Times | 2.73 | 2.21 | Not Available |
The terms of sanction include standard covenants normally stipulated for such facilities.
Not Applicable
ANY OTHER INFORMATIONNot Applicable
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2023) | 2023 (History) | 2022 | 2021 | 2020 | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 49.20 |
BWR BBB-/Stable
(removal from ISSUER NOT COOPERATING* category/Reaffirmed) |
02Jan2023 |
BWR BBB- Stable
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
01Oct2021 |
BWR BBB- Stable
(Reaffirmation and change in Outlook) |
15Jun2020 |
BWR BBB- Negative
(Reaffirmation) |
Fund Based | ST | 0.00 |
NA
|
02Jan2023 |
BWR A3
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
FB SubLimit | ST | NA |
NA
|
02Jan2023 |
BWR A3
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
01Oct2021 |
BWR A3
(Reaffirmation) |
15Jun2020 |
BWR A3
(Reaffirmation) |
Non Fund Based | ST | 5.00 |
BWR A3
(removal from ISSUER NOT COOPERATING* category/Reaffirmed) |
02Jan2023 |
BWR A3
(Reaffirmation/ISSUER NOT COOPERATING*) |
NA |
NA
|
01Oct2021 |
BWR A3
(Reaffirmation) |
15Jun2020 |
BWR A3
(Reaffirmation) |
Grand Total | 54.20 | (Rupees Fifty Four Crores and Twenty lakhs Only) |
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 CriteriaAnalytical Contacts | |
---|---|
Himanshu Seth Rating Analyst himanshu.s@brickworkratings.com |
Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Central Bank of India | Term LoanSanctioned | 4.75 | _ | 4.75 | |
2 | Central Bank of India | Cash CreditSanctioned | 5.00 | _ | 5.00 | |
3 | Central Bank of India | Bank GuaranteeSanctioned | _ | 1.00 | 1.00 | |
4 | Punjab National Bank | Bank GuaranteeSanctioned | _ | 4.00 | 4.00 | |
5 | Punjab National Bank | Cash CreditSanctioned | 8.50 | _ | 8.50 | |
6 | Punjab National Bank | Term LoanSanctioned | 24.60 | _ | 24.60 | |
7 | Punjab National Bank | Term LoanSanctioned | 6.35 | _ | 6.35 | |
Total | 49.20 | 5.00 | 54.20 | |||
TOTAL (Rupees Fifty Four Crores and Twenty lakhs Only) |
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