RATING RATIONALE
12Apr2022

Mohit Paper Mills Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 33.69 Crs. of Mohit Paper Mills Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(22 Jan 2021)
Present
Fund Based 34.39 31.19 Long Term BWR BB+/Stable
Downgrade
BWR BB + /Stable
Reaffirmation
Non Fund Based 2.50 2.50 Short Term BWR A4+
Downgrade
BWR A4 +
Reaffirmation
Grand Total 36.89 33.69 (Rupees Thirty Three Crores and Sixty 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

BWR reaffirms the long term ratings of Mohit Paper Mills Ltd. as BWR BB+(Stable)/A4+. The operating income has declined by 38.07% from Rs. 131.44 Cr. in FY 20 to Rs. 81.40 Cr. in FY21.TNW has decreased from Rs 33.22 Cr in FY20 to Rs 31.16 Cr in FY21 due to company incurred losses.Debt Protection metrics are satisfactory i.e. ISCR and DSCR at 3.58x and 1.99x in FY20. Both the coverage ratios have deteriorated to 0.65x and 0.83x in FY21. Conversion cycle stands at 44 days in FY20 to 49 days in FY21. It is also satisfactory at 45 days in FY22.Liquidity of the company is stretched

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

RATING SENSITIVITIES

Going forward, the ability of the company to improve its scale of operations, profitability margins, overall credit risk profile and efficiently manage its working capital requirement would be the key rating sensitivities.

Positive : The rating outlook may be revised to positive if the company is able to significantly improve its topline, DSCR and current ratio and overall performance of the company.

Negative : The rating may be downgraded if there is a delay in debt servicing, substantial decline in topline and deterioration in the liquidity ratios of the company.

LIQUIDITY INDICATORS - Stretched

1. Net Cash Accruals in FY21 is Rs.0.91 Cr against which CPLTD is Rs 5.99 Crs. It is estimated to improve in FY22 at Rs. 5.86 Cr against which CPLTD will be Rs 1.50 Crs.In FY23 Net cash accruels are expected to be Rs 5.62 Crs against which CPLTD will be Rs 2.01 Crs
2. The Cash and Bank balances as on 31.3.2021 is Rs. 2.13 Cr which is expected to improve to Rs 2.80 Cr in FY22.In FY23 it is estimated to be Rs 4.90 Crs
3. Debt Protection metrics are below the benchmark i.e. ISCR and DSCR at 0.65x and 0.83X in FY21. Both the coverage ratios are expected to be 2.49x and 0.99x in FY22 and 2.92x and 1.69x in FY23
4. Conversion Cycle is satisfactory at 49 days in FY21 which is estimated at 45 days in FY22.In FY23 ISCR and DSCR are expected to be 2.92x and 1.69x.
5. Current ratio is below the benchmark at 0.75x in FY21 which is expected to improve to 1.48x in FY22.
6. CC Utilization is 93.25%
7. NDS of the company is received upto Feb'22
Hence, the Liquidity of the company is stretched.

ABOUT THE ENTITY

Incorporated as a public limited company in 1992, Mohit Paper Mills Limited (MPML), manufactures printing and writing paper, newprint, soda ash and tissues papers at its 3 manufacturing plants with an aggregated installed capacity of 42900 MTPA and captive plant of 7.5 MW. The company is listed on the Bombay Stock Exchange. MMPL sells its product under the brand - Sapphire Plus, Crystal Bright, and Sunshine with a distribution network in PAN India. The company is promoted by Mr. Sandeep Jain and his family. Analyst has done quarter review of Q1, Q2 and Q3

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 81.40 131.44
EBITDA Rs.Crs. 1.93 9.60
PAT Rs.Crs. -3.44 3.20
Tangible Net Worth Rs.Crs. 31.16 33.22
Total Debt/Tangible Net Worth Times 1.25 0.98
Current Ratio Times 0.75 0.82

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Na

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 31.19
BWR BB+/Stable
(Reaffirmation)
22Jan2021
BWR BB+Stable
(Downgrade)
NA
NA
23Jan2019
BWR BBB-Stable
(Reaffirmation)
0.00
NA
NA
NA
NA
NA
18Oct2019
BWR BBB-Stable
(Reaffirmation)
Non Fund Based ST 2.50
BWR A4+
(Reaffirmation)
22Jan2021
BWR A4+
(Downgrade)
NA
NA
23Jan2019
BWR A3
(Reaffirmation)
0.00
NA
NA
NA
NA
NA
18Oct2019
BWR A3
(Reaffirmation)
Grand Total 33.69 (Rupees Thirty Three Crores and Sixty 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

Moni Sharma

Ratings Analyst moni.s@brickworkratings.com

Hari Kishan Yadav

Associate Director - Ratings hari.ky@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Mohit Paper Mills 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 Union Bank of India Term Loan 3.29 _ 3.29
2 Union Bank of India Cash Credit 21.00 _ 21.00
3 Union Bank of India Bank Guarantee _ 0.25 0.25
4 Union Bank of India Foreign Letter of Credit (FLC) _ 2.25 2.25
5 Union Bank of India CECL 0.23 _ 0.23
6 Union Bank of India Covid Term Loan 6.67 _ 6.67
Total 31.19 2.50 33.69
TOTAL (Rupees Thirty Three Crores and Sixty Nine lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork 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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR"s best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR"s opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user"s financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR"s ratings reflect BWR"s opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR"s public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR"s rating criteria are also generally made available without charge on BWR"s website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.