Jyoti CNC Automation Limited

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 699.27 Crs. of Jyoti CNC Automation Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (26 Mar 2021)	Present
Fund Based	484.42	525.53	Long Term	BWR BBB+/Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
Non Fund Based	169.77	173.74	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
Grand Total	654.19	699.27	(Rupees Six Hundred Ninety Nine Crores and Twenty Seven 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 rating of the bank loan facilities of Jyoti CNC Automation Ltd. considering the improvement in the performance of the Company post pandemic, long-standing experience of the promoters and established track record in the business, established relationship with reputed client base supporting its order book, exceptional design and execution facilities, moderate financial risk profile.

The ratings is however constrained by the working capital intensive nature of business and exposure to stiff competition.

BWR expects that the operating performance of the Company is expected to improve further in FY23 with improvement in order book position.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the promoters :
JCAL has an extensive track record in the metal cutting CNC machine tool manufacturing industry for over two decades. The company’s long presence in the industry and its strong technical and design capabilities enable it to provide customized machines to its customers
Synergies with the acquisition of Huron :
Jyoti CNC acquired a 150 years old French Machine Tool Company in 2007 – Huron Graffenstaden SAS. Huron is having two manufacturing plants in Strasbourg, France, and a strong sales and service network all over Europe. The acquired company is a pioneer across the world for its 5 axis machining centers, having a renowned clientele. Huron contributes to 25-30% of the consolidated turnover of the Company, JCAL
Established relationships with clients and low customer concentration :
The company’s reputed client base and its long-term association with the customers help it in getting repeat orders from its clients. The company currently has a healthy order book position of Rs 700 cr. And with the central government’s recently implemented Productivity Linked Incentive (PLI) scheme providing added advantage, the revenues of the company are expected to ramp up. The company is expected to have an increased flow of orders thus boosting its financial performance.
The moderate financial risk profile :
The company has a moderate financial risk profile with the total debt/TNW standing at 1.6x in FY22, subdued coverage ratios with ISCR and DSCR standing at 1.6x and 1.36x respectively, and the OPM and NPM at 16.4% and 2.8% respectively in FY22.

Credit Risks:

Working Capital Intensive nature of operations :
The company’s operations are working-capital-intensive due to the high cost of inventories on account of the fact that the company makes order specific machinery which takes a period of over 12 to 18 months to manufacture resulting in bottlenecks in inventory clearance, advance to suppliers, and delays in getting payments from government departments, among others.
Intensely competitive nature of the machine tools industry :
BFWL faces high competition for its low value-added machinery from domestic players. It also competes with overseas players in the high value-added product segment.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of Jyoti CNC Automation Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Going forward, the Company’s ability to manage the working capital efficiently, improve the scale of operations, and improve and maintain profitability, along with the debt servicing capability and liquidity, will be key rating sensitivities.

Positive: The rating may be upgraded if the Company is able to achieve significant growth in revenue and profitability backed by a favorable industry scenario and optimum utilization of capacities.

Negative: The rating may be downgraded if lower-than-expected revenues affect profitability margins, coverage ratios, liquidity, and gearing ratios adversely.

LIQUIDITY INDICATORS - Adequate

The company has adequate liquidity supported by moderate utilization of bank lines around 80-85% and no issues with respect to the drawing power. The company reports net cash accruals of around Rs 45-60 Cr against its total repayment obligation of Rs 39 crs and Rs 44 crs in fiscal 2023 and fiscal 2024. The company’s liquidity is also supported by the unsecured loans from the promoters, Rs 48.8 crs as on March 1, 2022, increased by Rs 24 crs in FY22. The company maintains fixed deposits with lenders Rs.12 crs as margin money for its non-fund-based limits. Going forward, BWR believes the company will be reporting adequate liquidity to meet its repayment obligations and any incremental in working capital requirements.

ABOUT THE ENTITY

The Company is into the manufacturing of CNC metal cutting machines for both turning and milling operations. The promoter Mr. P G Jadeja has been in the machine tool industry for more than two decades. Jyoti was the first company to manufacture CNC machines in Gujarat. It was not an end, there have been many firsts attached with Jyoti since then. The company has a wide product basket consisting of a series of CNC Turning Centers, CNC Turn Mill Centers, CNC Vertical Machining Centers, CNC Horizontal Machining Centers, CNC Vertical Line Machines, and High-tech CNC 3 axis and 5 axis machining centers. The Company has three different plants located at GIDC, Metoda, RAJKOT – Gujarat, having a present plant capacity of manufacturing 3600 machines p.a. equipped with world-class infrastructures like state of art machine shops with latest and technologically advanced plant and machinery, Assembly Shops, Foundry, Sheet Metal, Paint shop, and other allied infrastructure. Jyoti caters the machines to Automobile, Aerospace, Allied Machinery, Agriculture, Die & Mould, Jewellery, Defense, Medical Equipment, Plastic Machineries, Power and Textile Machinery. Jyoti acquired a 150 years old French Machine Tool giant in 2007 – Huron Graffenstaden SAS. Huron is having two manufacturing plants in Strasbourg and a strong sales and service network all over Europe. The acquired company is a pioneer across the world for its 5-axis machining centers, having renowned clientele like Volkswagen, Ferrari, Rolls Royce, Siemens, Boeing, Airbus, Fiat, BMW, Mercedes, GE, etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Provisional)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	677.81	436.33
EBITDA	Rs.Crs.	111.42	53.92
PAT	Rs.Crs.	19.40	-19.88
Tangible Net Worth	Rs.Crs.	399.84	386.54
Total Debt/Tangible Net Worth	Times	1.52	1.43
Current Ratio	Times	1.26	1.13

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ANY OTHER INFORMATION

None

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	525.53	BWR BBB+/Stable (Reaffirmation)	26Mar2021	BWR BBB+Stable (Reaffirmation)	NA	NA	18Oct2019	BWR BBB+Stable (Upgrade)
		0.00	NA	NA	NA	NA	NA	24Dec2019	BWR BBB+Stable (Reaffirmation)
Non Fund Based	ST	173.74	BWR A2 (Reaffirmation)	26Mar2021	BWR A2 (Reaffirmation)	NA	NA	18Oct2019	BWR A2 (Upgrade)
		0.00	NA	NA	NA	NA	NA	24Dec2019	BWR A2 (Reaffirmation)
Grand Total		699.27	(Rupees Six Hundred Ninety Nine Crores and Twenty Seven lakhs Only)

Rating Advisory, as on 31Mar2022
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
Forum Rushit Parekh Manager - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 forum.rp@brickworkratings.com	Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Jyoti CNC Automation Limited

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	Bank of Baroda	Cash Credit - Sanctioned	32.00	_	32.00
2	Bank of Baroda	GECL - Sanctioned	9.32	_	9.32
3	Bank of India	Cash Credit - Sanctioned	49.60	_	49.60
4	Bank of India	GECL - Sanctioned	23.89	_	23.89
5	Export Import Bank of India	Term Loan - Out-standing	69.33	_	69.33
6	IDBI Bank	Cash Credit - Sanctioned	33.50	_	33.50
7	IDBI Bank	BG/LC/ILC - Sanctioned	_	18.00	18.00
8	IDBI Bank	GECL - Sanctioned	11.18	_	11.18
9	Punjab National Bank	GECL - Sanctioned	12.90	_	12.90
10	Punjab National Bank	Cash Credit - Sanctioned	20.00	_	20.00
11	Punjab National Bank	Term Loan - Out-standing	13.26	_	13.26
12	Saurasthra Gramin Bank	Cash Credit - Sanctioned	40.00	_	40.00
13	State Bank Of India (SBI)	Cash Credit - Sanctioned	83.00	_	83.00
14	State Bank Of India (SBI)	GECL - Sanctioned	_	_	0.00
15	State Bank Of India (SBI)	BG/LC/ILC - Sanctioned	_	56.50	56.50
16	Union Bank of India	BG/LC/ILC - Sanctioned	_	99.24	99.24
17	Union Bank of India	PC/PCFC - Sanctioned	_	_	0.00
18	Union Bank of India	Cash Credit - Sanctioned	98.68	_	98.68
19	Union Bank of India	GECL - Sanctioned	28.87	_	28.87
Total			525.53	173.74	699.27
TOTAL (Rupees Six Hundred Ninety Nine Crores and Twenty Seven lakhs Only)

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