Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 66.00 Crs. of Anu Products Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (21 Jan 2020) |
Present | ||
| Fund Based | 50.00 | 50.00 | Long Term |
BWR BBB (Stable)
Upgrade |
BWR BBB
/Stable Reaffirmation |
| 2.00 | 2.00 | Short Term |
BWR A3+
Upgrade |
BWR A3 +
Reaffirmation |
|
| Non Fund Based | 12.00 | 14.00 | Short Term |
BWR A3+
Upgrade |
BWR A3 +
Reaffirmation |
| Grand Total | 64.00 | 66.00 | (Rupees Sixty Six Crores Only) | ||
The rating reaffirmation is on account of the experienced management of the company, reasonable scale of operations, comfortable debt protection metrics, gearing, current ratio and Debt/EBITDA ratio, besides stable profit margins.The rating is ,however, constrained by elongated conversion cycle, raw material fluctuation risk and competition, besides inherent risk in the agro-chemicals industry
The company outlook is Stable as the company has maintained a reasonable scale of operations in FY21 despite the impact of Covid 19 induced lock down. The company registered sales of approximately Rs.265.84 Crs in FY21.
KEY RATING DRIVERSCredit Strengths:
Key Promoters of the company, Mr. Jugal Kishore Bhartiya has more than 3 decades of experience in the same line of business and other directors have more than a decades of experience.
The company registered a total operating income of Rs 220.64 Crs in FY20 against Rs 218.20 Crs in FY19. The company achieved sales of Rs 223.74 Crs in 9MFY21 and is estimated to have achieved revenue of Rs Rs. 265.84 Crs in FY21. The company is expanding business in terms of importing a few essential chemicals directly from foreign countries, which they will sell directly to companies and institutions in order to increase the company's sales as well as bottom line YOY.
Gearing (Total Debt/TNW) of the company is comfortable at 0.66x in FY20 (0.77x in FY19) owing to higher net worth as compared to the debt of the company. APL’s current ratio is comfortable at 1.70x in FY20 (1.76x in FY19) shows the moderate ability of the company to meet its current liabilities from current assets.Total Debt/EBITDA ratio is comfortable at 3.23x in FY20 (3.38x in FY19).
The company has moderate debt protection metrics, having interest service coverage ratio (ISCR) and debt service coverage ratio (DSCR) of 2.99x in FY20 (2.30x in FY19) and 2.71x in FY20 (1.68x in FY19) respectively.
APL’s operating profit margins are stable at 6.85% in FY20 against 6.83% in FY19. Net profit margins of the company are good and have improved from 3.44% in FY19 to 3.97% in FY20 mainly due to declines in finance charges in FY20 owing to low working capital utilization of limits. BWR is also expecting stable profit margins for FY21.
Credit Risks:
Conversion cycle of 189 days in FY20 (195 days in FY19) is stretched mainly due to the high inventory days led by pan-India large dealer networks and a large variety of products wherein every product is packed in different sizes of packets coupled with the seasonal nature of business.
The company is susceptible to raw material price fluctuation risk. The major raw materials include special chemicals like methyl isocyanate, methallyl chloride etc, emulsifiers, solvents, stabilizers, the prices of which are volatile, depending on the demand-supply situation. Any increase in the price, if not passed through, may adversely affect the firm’s profit margins, besides competition from peers may further affect profit margins.
The demand and supply is dependent on the monsoon, agro climatic conditions and farmer income. Any change in the monsoon and rainfall for a specific year could adversely affect the demand of the products in the short to medium term and hence could affect the profitability of the company. In addition to that, the industry is regulated under strict government norms and regulations.
BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating. Reference may be made to the detailed Rating Criteria hyperlinked below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Upward : The outlook may be revised to positive or the rating may be upgraded if there is reasonable improvement in the scale of operations and conversion cycle, besides financial risk profile continuing to be comfortable.
Downward : BWR may revise the ratings downwards if the company achieves notably lower revenue than expected and deterioration in debt protection metrics and liquidity.
LIQUIDITY INDICATORS - Adequate
The company had cash accruals of Rs 9.54 Crs against low fixed term liabilities of Rs 0.33 Crs in FY20 (mainly of vehicle loans). BWR is expecting cash accruals of more than Rs 8 Crs against current portion of long term debt (CPLTD) of Rs 0.37 Crs for FY21. The company working capital utilization is below 80% provides a further cushion to the liquidity of the company.
ABOUT THE ENTITYAnu Products Ltd, an ISO-9001:2008 certified Company, was incorporated in 1990 and commenced operations from 1992 after setting up a plant for manufacture of pesticides in Faridabad. The company is engaged in manufacturing agro-chemical products with a range of plant protection chemicals including insecticides, herbicides, fungicides, weedicides etc.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 220.64 | 218.20 |
| EBITDA | Rs.Crs. | 15.12 | 14.91 |
| PAT | Rs.Crs. | 8.75 | 7.52 |
| Tangible Net Worth | Rs.Crs. | 74.42 | 65.67 |
| Total Debt/Tangible Net Worth | Times | 0.66 | 0.77 |
| Current Ratio | Times | 1.70 | 1.76 |
NA
NA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 50.00 |
BWR BBB/Stable
|
21Jan2020 |
BWR BBB (Stable)
|
NA |
NA
|
10Jul2018 |
BWR BBB- (Stable) INC
|
| Fund Based | ST | 2.00 |
BWR A3+
|
21Jan2020 |
BWR A3+
|
NA |
NA
|
10Jul2018 |
BWR A3 INC
|
| Non Fund Based | ST | 14.00 |
BWR A3+
|
21Jan2020 |
BWR A3+
|
NA |
NA
|
NA |
NA
|
| Grand Total | 66.00 | (Rupees Sixty Six Crores 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 Criteria| Analytical Contacts | |
|---|---|
|
Raman Thakur Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com |
Tanu Sharma Director - Ratings tanusharma@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Cash CreditSanctioned | 30.00 | _ | 30.00 | ||
| 2 | Packing Credit (PC)Sanctioned | _ | 2.00 | 2.00 | ||
| 3 | Derivative LimitSanctioned | _ | 2.00 | 2.00 | ||
| 4 | Over DraftSanctioned | 20.00 | _ | 20.00 | ||
| 5 | ILC/FLCSanctioned | _ | 12.00 | 12.00 | ||
| Total | 50.00 | 16.00 | 66.00 | |||
| TOTAL (Rupees Sixty Six Crores Only) | ||||||
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About Brickwork RatingsBrickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
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