RATING RATIONALE
27Sep2021

United Drilling Tools Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 58.09 Crs. of United Drilling Tools Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(30 Jul 2020)
Present
Fund Based 25.07 24.42 Short Term BWR A3+
Upgrade
BWR A3 +
Reaffirmation
Non Fund Based 6.00 11.00 Long Term BWR BBB/(Stable)
Upgrade
BWR BBB /Stable
Reaffirmation
17.02 22.67 Short Term BWR A3+
Upgrade
BWR A3 +
Reaffirmation
Grand Total 48.09 58.09 (Rupees Fifty Eight Crores and Nine lakhs 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


RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has reaffirmed the long term rating to BWR BBB(Stable) and short term rating to BWR A3+ for the bank loan facilities of M/s United Drilling Tools Ltd (UDTL). The rating draws comfort from company's experienced promoters with established market position, strong financial risk profile, increase revenues in FY 21 along with healthy orders in pipeline. 

However, the rating is constrained by the company's tender based nature of operations and effect of Covid-19 lockdown.

The outlook of the company is Stable as the company has shown improvement in the operating revenues and having a healthy order book from ONGC, Oil industries ltd etc which provides revenue visibility in the medium term.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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)

RATING SENSITIVITIES

Going forward the ability to achieve the projections and maintain a strong credit profile would remain the key rating sensitivities.

Positive: The rating will be upgraded if the company is able to make significant and sustained improvement in their revenues, and sustain healthy profitability margins.

Negative: The rating will be downgraded if there is a significant deterioration in the financial risk profile and liquidity of the company.

LIQUIDITY INDICATORS - Adequate

Current ratio stands at 3.40x in FY21 and cash and cash equivalents stand at Rs. 5.66 crores in FY21. Total cash accruals stood at Rs. 36.88 Cr in FY21 as against CPLTD of Rs. 0.08 Cr and projected the cash accruals of Rs. 40.95 Cr in FY 22 as against the CPLTD of Rs. 0.19 Cr in FY 21. The debt protection metrics of the company are moderate with an ISCR at 46.15 times and DSCR at 37.96 times for FY 21. As per the banker, the working capital limits are not utilised. 

ABOUT THE ENTITY

United Drilling Tools Limited, established in 1985, is a publicly listed company engaged in manufacturing of Oilfield equipments like connectors, truck mounted winches, casing pipes, gas lift valve, stabilisers, gas lift equipment, down hole tools etc, winch are used for drilling of oil. The company has three manufacturing units out of which two are located in Noida (Uttar Pradesh) and one is in Kutch (Gujarat). The company is a sole Indian manufacturer having API (American Petroleum Institute) approval for items manufactured. Its Corporate Office is situated in Phase II, Noida and registered office is in New Delhi. The company is listed on BSE. The company has been promoted by Mr. Pramod Kumar Gupta, Mr. Kanal Gupta, Mr. Inderpal Sharma who are ably assisted by other independent directors.
 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 142.85 111.75
EBITDA Rs.Crs. 40.40 53.04
PAT Rs.Crs. 32.70 45.22
Tangible Net Worth Rs.Crs. 168.78 139.01
Total Debt/Tangible Net Worth Times 0.11 Not Available
Current Ratio Times 3.40 8.20

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 NA
NA
NA
NA
28May2019
BWR BBB-(Stable)
(Assignment)
NA
NA
Fund Based ST 24.42
BWR A3+
(Reaffirmation)
30Jul2020
BWR A3+
(Upgrade)
NA
NA
NA
NA
Non Fund Based LT 11.00
BWR BBB/Stable
(Reaffirmation)
30Jul2020
BWR BBB(Stable)
(Upgrade)
NA
NA
NA
NA
Non Fund Based ST 22.67
BWR A3+
(Reaffirmation)
30Jul2020
BWR A3+
(Upgrade)
28May2019
BWR A3
(Assignment)
NA
NA
Grand Total 58.09 (Rupees Fifty Eight Crores and Nine lakhs 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

Sanskriti Jain

Rating Analyst sanskriti.j@brickworkratings.com

Tanu Sharma

Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
United Drilling Tools 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 Axis Bank Ltd. Packing Credit in Foreign Currency (PCFC)Sanctioned _ 12.00 12.00
2 Axis Bank Ltd. Letter of CreditSanctioned _ 11.00 11.00
3 Axis Bank Ltd. Bank GuaranteeSanctioned 11.00 _ 11.00
4 Axis Bank Ltd. Forward ContractSanctioned _ 1.00 1.00
5 Indian Bank Packing Credit in Foreign Currency (PCFC)Sanctioned _ 10.35 10.35
6 Indian Bank Standby Line of CreditSanctioned _ 2.07 2.07
7 Indian Bank Bank GuaranteeSanctioned _ 6.00 6.00
8 Indian Bank Letter of CreditSanctioned _ 2.60 2.60
9 Indian Bank Standby line of Credit (SLC)Sanctioned _ 1.72 1.72
10 Indian Bank Forward ContractSanctioned _ 0.35 0.35
Total 11.00 47.09 58.09
TOTAL (Rupees Fifty Eight Crores and Nine lakhs Only)
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