RATING RATIONALE
02Dec2021

Surfa Coats (India) Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs.33.43 Crs. of Surfa Coats (India) Pvt. Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(07 Oct 2020)
Present
Fund Based 34.50 31.68 Long Term BWR BBB- /Stable
Assignment
BWR BBB - /Stable
Reaffirmation
Non Fund Based 2.50 1.75 Short Term BWR A3
Assignment
BWR A3
Reaffirmation
(0.00) (0.75)
Grand Total 37.00 33.43 (Rupees Thirty Three Crores and Forty Three 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

The rating draws strength from experience of the directors, improved Total Operating Income, moderate net worth, low Gearing Ratio, satisfactory Interest Service Coverage Ratio and Debt Service Coverage Ratio and improved Net Profit Margins. The rating however is constrained by reduced Operating Profit Margin, and competitive nature of industry.


BWR believes the 'Surfa Coats (India) Pvt. Ltd.’s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at Surfa Coats (India) Pvt Ltd's rating, BWR has considered standalone financial and business risk profile of Surfa Coats (India) Pvt Ltd.

RATING SENSITIVITIES

Going forward, the ability of the Company to improve its scale of operations by increasing its revenue growth, improve its profit margins, manage working capital efficiency and prompt servicing of debt obligation shall remain key rating sensitivity.

Positive: If the Company manages to achieve its projections and improve the profitability margins would be positive for the ratings.

Negative: Deterioration in Total Operating Income and key financial indicators would be negative for the ratings.

LIQUIDITY INDICATORS - Adequate

The Company's liquidity position is adequate. The Company is expected to generate Net Cash Accruals of Rs.4.74 Crs in FY22 and Rs. 5.00 Crs in FY23 against its Principal repayment of Rs.4.36 Crs in FY22 and Rs.3.71 Crs in FY23. The Company is expecting adequate Current Ratio to be 1.14x as on 31st Mar 2022 and 1.13x as on 31st Mar 2023.Cash and cash equivalents were reported at Rs.10.60  Crs as on 31st Mar 2021. The Company is  Current ratio was at 1.20 times as on 31st Mar 2021 which is adequate. Average monthly utilization of Cash Credit was more than 76.36% as per bank statement Analysis. 

ABOUT THE ENTITY

Surfa Coats (India) Pvt. Ltd.(SCIPL) was Incorporated on 11 Sep 1997 at Bangalore. It is engaged in Manufacturing & Marketing of Decorative Paints. The manufacturing plant unit is located at Peenya and Tumkur, Karnataka. Mr. Yashodhar U, the Managing Director has 58 years of an experience in this industry. The company manufactures standardized decorative paints that can be used on interior and exterior masonry surfaces. The raw material used in the manufacturing process is white cement, Titanium dioxide, chemicals & pigments. The manufacturing process of acrylic products in general is as follows: Procurement of raw material Mixing in ball mill Stirring and mixing with water All the manufacturing activities are done in-house and the manufacturing process is semi automated. Manufacturing is done in batches and the manufacturing cycle time is three hours to a single day. Number of batches per day varies based on orders received. The company has an in-house research and development facility comprising well trained chemists. It also has a testing facility partly handled by the research and development team for internal quality assurance.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 138.89 124.97
EBITDA Rs.Crs. 8.51 7.85
PAT Rs.Crs. 2.74 2.43
Tangible Net Worth Rs.Crs. 24.12 21.45
Total Debt/Tangible Net Worth Times 1.67 1.41
Current Ratio Times 1.20 1.22

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

CRISIL BB+(Stable)/A4+ ISSUER NOT COOPERATING as on 20 Sep 2020

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 31.68
BWR BBB-/Stable
(Reaffirmation)
07Oct2020
BWR BBB- Stable
(Assignment)
NA
NA
NA
NA
Non Fund Based ST 1.75
BWR A3
(Reaffirmation)
07Oct2020
BWR A3
(Assignment)
NA
NA
NA
NA
NFB SubLimit ST (0.75)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Grand Total 33.43 (Rupees Thirty Three Crores and Forty Three lakhs Only)
COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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.

Analytical Contacts

Dimple Nathalal Bhut

Ratings Analyst Board : +91 80 4040 9940 dimple.b@brickworkratings.com

Nagaraj K

Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Surfa Coats (India) Pvt. 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 Kotak Mahindra Bank Term LoanOut-standing 5.00 _ 5.00
2 Union Bank of India Cash CreditSanctioned 25.00 _ 25.00
3 Union Bank of India Letter of CreditSanctioned _ _ 0.00
4 Union Bank of India Covid -19 Emergency Line CreditOut-standing 0.26 _ 0.26
5 Union Bank of India GECLOut-standing 1.42 _ 1.42
6 Union Bank of India Inland Letter of GuaranteeSanctioned _ 1.75 1.75
Sub-Limit (Letter of Credit) Sanctioned (0.75)
Total 31.68 1.75 33.43
TOTAL (Rupees Thirty Three Crores and Forty Three lakhs Only)
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