Niine Pvt. Ltd. (erstwhile Shudh Plus Hygiene Products)

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 144.13 Crs. of Niine Pvt. Ltd. (erstwhile Shudh Plus Hygiene Products) from BWR BBB- (Stable)/A3 to BWR BBB (Stable)/A3+

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (07 Sep 2020)	Present
Fund Based	34.39	144.13	Long Term	BWR BBB- /Stable Upgrade	BWR BBB /Stable Upgrade
Fund Based	(0.00)	(10.00)	Short Term		BWR A3 + Upgrade
Non Fund Based	(0.00)	(10.00)	Short Term	BWR A3 Upgrade	BWR A3 + Upgrade
	(0.00)	(10.00)
	(0.00)	(25.00)
	(5.00)	(0.00)
Grand Total	34.39	144.13	(Rupees One Hundred Forty Four Crores and Thirteen 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) upgrades the ratings of Niine Private Limited (NPL; erstwhile Shudh Plus Hygiene Products), factoring in its improved financial performance in FY21 and H1FY22 along with improvements in debt protection metrics. The ratings also drive comfort from location advantage and untapped business potential of feminine hygiene and baby care products market in India. The ratings are, however, constrained by moderate track record of operations ,albeit, experienced promoters and professional management team and competition from established players in the market.

Covid-19 impact: The operations of the company were impacted in Q1FY22, as evident by lower utilization levels of production. However, being an essential item and service along with high potential untapped market, Covid-19 pandemic does not have a major negative impact on the operations of the company as evident by growing scale of operations

Rating Outlook: Stable

BWR believes that NPL’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. The rating outlook may be revised to 'Positive' in case of substantial improvement in operating parameters. BWR may revise its outlook from 'Stable' to 'Negative' in case there is a deterioration in the financial parameters over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Locational Advantage :
The company is located in Gorakhpur cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.
Improving financial performance :
The financial performance of the company has improved significantly on account of new capacities being added and growing market recognition and acceptance of the company's products. The revenue of the company almost doubled (1.97 times) in FY21 and stood at Rs. 250.08 cr. Growth in revenue, alongwith less than proportionate increase in fixed cost, resulted in increase in profitability of the company, both in absolute terms as well as %age terms. Operating margin and PAT margin stood at 8.41% and 2.32%, respectively for FY21. For H1FY22, the company reports a total revenue of Rs. 151 cr.
Debt Protection Metrics :
Debt Protection index stood comfortable and improved with ISCR and DSCR of 3.4x (FY20:2.67x) and 2.24x (FY20: 1.96x), respectively for FY21.Debt to EBITDA improved to 3.11x (FY20:3.71x)
Untapped Business potential of female hygiene and baby care products market in India :
In India, there exists a high business potential for the feminine hygiene and babycare products who provide a good quality product at a reasonable and affordable price point. And the “Niine” brand is trying to address both the issues of quality and affordability and this reflects in the response their product has got in the past years in the market. The products of the company are available at general and medical stores PAN India and at all major online platforms under the brand name of "Niine".

Credit Risks:

Competition from established players :
There are some MNC brands which command the majority of the market and any new entrant will face tough competition from these established players especially in urban areas. Although there has been an increased visibility for the firm’s brand “Niine” across various advertising platforms, it will take some time for the brand to find a wider acceptability among the urban users. This will also lead to continuous sales and marketing spends in the medium term.
Moderate track record of operations; albeit experience promoters and profession management team :
The Operations of the company started in 2016. However, the company is manage by promoters having more than 1 decade of experience in the same line of business. The directors are well supported by a well experienced professional team.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology on a standalone basis, as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: Growth in the company’s revenues year on year on projected lines, timely repayment of debt obligations and the company’s ability to maintain its financial risk profile.
Negative: Substantial deviation from projections in the medium term, any delay in debt servicing and any major deterioration in the financial risk profile i.e. gearing, DSCR & ISCR etc.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity due to presence of sufficient internal cash accruals of Rs. 15.14 cr. (FY21) against maturing debt of Rs. 8.82 cr. in FY22, moderate utilisation of bank limits (80-90%) and low receivable days with moderate inventory holding period, resulting in moderated conversion cycle of 107 days as on March 31, 2021. The current ratio of the company stood at a moderate level of 1.78x, as on March 31, 2021.

ABOUT THE ENTITY

Niine Private Limited (NPL; erstwhile M/s Shudh Plus Hygiene Products, partnership firm registered in 2016) is a closely held private limited company incorporated on Aug 11, 2021, based in Gorakhpur (UP). The company is engaged into manufacturing of feminine hygiene (Sanitary Napkins) and baby care (Baby Diapers) products. The manufacturing facility at Gorakhpur consists of 4 assembly lines of which 3 lines are dedicated towards feminine hygiene products (annual capacity of 144 crore units) and 1 line dedicated towards baby care products (annual capacity of 38 lakh units). NPL has also commenced selling Germ Control Wipes and Baby Wipes through contract manufacturing from January-21. The products of the company are available at general and medical stores PAN India (dealer network) and at all major online platforms under the brand name of "Niine".

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	251.82	126.43
EBITDA	Rs.Crs.	21.19	11.43
PAT	Rs.Crs.	5.85	1.29
Tangible Net Worth	Rs.Crs.	72.28	52.59
Total Debt/Tangible Net Worth	Times	1.39	0.81
Current Ratio	Times	1.78	2.56

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities

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	144.13	BWR BBB/Stable (Upgrade)	07Sep2020	BWR BBB- Stable (Upgrade)	17Dec2019	BWR BB+ Stable (Upgrade)	NA	NA
		NA	NA	NA	NA	11Apr2019	BWR BBStable (Assignment)	NA	NA
FB SubLimit	ST	(10.00)	BWR A3+ (Upgrade)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	NA	NA	NA	NA	11Apr2019	BWR A4 (Assignment)	NA	NA
NFB SubLimit	ST	(10.00)	BWR A3+ (Upgrade)	07Sep2020	BWR A3 (Upgrade)	17Dec2019	BWR A4+ (Upgrade)	NA	NA
NFB SubLimit	ST	(10.00)	BWR A3+ (Upgrade)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(25.00)	BWR A3+ (Upgrade)	NA	NA	NA	NA	NA	NA
Grand Total		144.13	(Rupees One Hundred Forty Four Crores and Thirteen 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
Kanwalpreet Singh Ratings Analyst kanwalpreet.s@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Niine Pvt. Ltd. (erstwhile Shudh Plus Hygiene Products)

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.	Cash Credit - Sanctioned	30.00	_	30.00
	Sub-Limit (Letter of Credit) - Sanctioned		(10.00)
2	HDFC Bank	Cash Credit - Sanctioned	25.00	_	25.00
	Sub-Limit (LC) - Sanctioned		(25.00)
3	HDFC Bank	Term Loan - Sanctioned	40.00	_	40.00
4	ICICI Bank	Term Loan - Sanctioned	5.12	_	5.12
5	ICICI Bank	Term Loan - Sanctioned	13.12	_	13.12
6	ICICI Bank	Cash Credit - Sanctioned	24.00	_	24.00
	Sub-Limit (buyer's credit) - Sanctioned		(10.00)
	Sub-Limit (Letter of Credit) - Sanctioned		(10.00)
7	ICICI Bank	Emergency Credit Line Guarantee Scheme (ECLGS) - Sanctioned	6.89	_	6.89
8	Union Bank of India	Cash Credit - Sanctioned	_	_	0.00
	Sub-Limit (Buyer's Credit/ILC/FLC) - Sanctioned		(0.00)
9	Union Bank of India	Term Loan - Sanctioned	_	_	0.00
Total			144.13	0.00	144.13
TOTAL (Rupees One Hundred Forty Four Crores and Thirteen lakhs Only)

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