RATING RATIONALE
15Mar2022

Delton Cables Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 89.20 Crs. of Delton Cables Ltd

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(15 Dec 2020)
Present
Fund Based 35.00 39.20 Long Term BWR BB+/Stable
Upgrade
BWR BB + /Stable
Reaffirmation
Non Fund Based 50.00 50.00 Short Term BWR A4+
Upgrade
BWR A4 +
Reaffirmation
Grand Total 85.00 89.20 (Rupees Eighty Nine Crores and Twenty 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 has reaffirmed the long-term rating of Delton Cables Limited (DCL, or ‘the company’) to BWR BB+, with a ‘Stable’ outlook and short-term rating to BWR A4+.

The ratings derive strength from the experienced management team, established position of the company in the industry and satisfactory overall gearing.The ratings are constrained by the working capital intensive nature of operations and declining profitability margins with its susceptibility to any adverse movements in the raw material prices. The ratings are further constrained by the competitive nature of the industry.

Outlook: Stable

BWR believes that the business and financial risk profile of DCL will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. The outlook may be revised to 'Positive' in case revenue and profitability show a sustained improvement leading to an improved financial and liquidity profile. The rating outlook may be revised to 'Negative' in case the profitability generated is much lower than anticipated, there are aggressive debt-funded capex plans, or there is a significant deterioration in the overall liquidity profile of the company.

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Positive: The rating may be upgraded upon sustained and significant improvement in operating income, profitability margins leading to deleveraging and improved debt coverage indicators.

Negative: The rating may be revised downward in case revenues and EBITDA of the company substantially deteriorates from current level. Rating may also be adversely affected in case of significant deterioration in gearing and coverage ratios. Any delay in receipt of land compensation from the Haryana government or any delay in timely need based financial support from the promoters may have a negative impact on the liquidity profile of the company.

LIQUIDITY INDICATORS - Adequate

The net cash accruals of the company stood at Rs. 2.27 Cr against negligible fixed term debt obligation in FY21. The company has a long-term debt obligation of Rs. 0.65 Crs in FY 22 and Rs. 2.18 Crs to be paid in FY 23. The average utilization of the fund-based working capital limit stood at ~93% in the last six months period ended Feb-2022. Cash and cash equivalents remained at Rs 0.38 Crs as on December 31, 2021. To fund various business requirements, the directors of the company had infused funds amounting to Rs. 2.50 Crs in 9MFY22, in the form of unsecured loans. The company is expected to receive an amount of approximately Rs.18 Crs by June-2022, in the form of enhanced compensation for the non core asset sold in the past. The same is expected to further lend support to the liquidity profile of the company going forward. Further, the company has not planned for any major debt-funded capex in the near to medium term.

ABOUT THE ENTITY

Delton Cables Limited (DCL), incorporated in 1964 by Lt. Sh. R.K. Gupta as a private limited company and later, was converted into a public limited in 1981. Presently Sh. V.K. Gupta (s/o Lt. Sh. R.K. Gupta) is the promoter, and the company is listed on Bombay Stock Exchange. It is engaged in the manufacturing of wires and cables, power cables, radio high frequency cables & PVC compound. It is also into the manufacturing of switch gears. It sells products under its own brand name - ‘DELTON’.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 123.16 125.74
EBITDA Rs.Crs. 9.61 12.09
PAT Rs.Crs. 0.62 5.89
Tangible Net Worth Rs.Crs. 55.07 54.49
Total Debt/Tangible Net Worth Times 1.09 0.86
Current Ratio Times 1.37 1.29

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 39.20
BWR BB+/Stable
(Reaffirmation)
NA
NA
15Dec2020
BWR BB+Stable
(Upgrade)
05Apr2019
BWR BBPositive
(Upgrade)
0.00
NA
NA
NA
NA
NA
20Nov2019
BWR BBPositive
(Reaffirmation)
Non Fund Based ST 50.00
BWR A4+
(Reaffirmation)
NA
NA
15Dec2020
BWR A4+
(Upgrade)
05Apr2019
BWR A4
(Reaffirmation)
0.00
NA
NA
NA
NA
NA
20Nov2019
BWR A4
(Reaffirmation)
Grand Total 89.20 (Rupees Eighty Nine Crores and Twenty 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

Neha Wahi

Ratings Analyst Board : +91 11 2341 2232 nehawahi@brickworkratings.com

Sudeep Sanwal

Associate Director - Ratings sudeep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Delton Cables 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 Canara Bank Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned 7.68 _ 7.68
2 Canara Bank Working Capital Demand LoanSanctioned 11.52 _ 11.52
3 Canara Bank Covid -19 Emergency Line CreditSanctioned 0.43 _ 0.43
4 Canara Bank GECLSanctioned 1.00 _ 1.00
5 Canara Bank GECLSanctioned 3.90 _ 3.90
6 Canara Bank Bank GuaranteeSanctioned _ 12.00 12.00
7 Canara Bank ILC/FLCSanctioned _ 18.00 18.00
8 Federal Bank Bank GuaranteeProposed _ 1.00 1.00
9 Federal Bank ILC/FLCProposed _ 6.00 6.00
10 Federal Bank Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned 6.40 _ 6.40
11 Federal Bank Bank GuaranteeSanctioned _ 3.00 3.00
12 Punjab National Bank Open Cash Credit / Cash Credit (Hypothecation/Pledge)Sanctioned 6.40 _ 6.40
13 Punjab National Bank GECLSanctioned 0.18 _ 0.18
14 Punjab National Bank GECLSanctioned 0.39 _ 0.39
15 Punjab National Bank GECLSanctioned 1.30 _ 1.30
16 Punjab National Bank ILC/FLCSanctioned _ 6.00 6.00
17 Punjab National Bank Bank GuaranteeSanctioned _ 4.00 4.00
Total 39.20 50.00 89.20
TOTAL (Rupees Eighty Nine Crores and Twenty lakhs Only)
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