Brickwork Ratings removes the ratings from issuer not cooperating classification and upgrades the ratings, with a stable outlook, for the Bank Loan facilities aggregating Rs.111.12 Crs of Khyber Industries Pvt. Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (18 May 2021) |
Present | ||
Fund Based | 91.89 | 110.12 | Long Term |
BWR BB /Stable
Downgrade/ISSUER NOT COOPERATING* |
BWR BBB -
/Stable Upgrade |
6.50 | 0.00 | Short Term |
BWR A4
Downgrade/ISSUER NOT COOPERATING* |
_ | |
Non Fund Based | 1.00 | 1.00 | Short Term |
BWR A4
Downgrade/ISSUER NOT COOPERATING* |
BWR A3
Upgrade |
Grand Total | 99.39 | 111.12 | (Rupees One Hundred Eleven Crores and Twelve lakhs Only) |
BWR believes that KIPL’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 improvement in scale of operations, profitability levels and the solvency profile.. BWR may revise its outlook from 'Stable' to 'Negative' in case there is a deterioration in the financial parameters over the medium term.
Credit Strengths:
Incorporated in 1982, the company is involved in the manufacturing of grey cement. The company is one of the earliest cement manufacturers in Kashmir. KIPL is a closely-held private limited company owned by the Trumboo family and their friends and relatives. KIPL’s directors, Mr.Khurshid Tramboo, Mr.Abdul Quayoom Tramboo, Mr. Riaz Tramboo and Mr.Umar Tramboo have a collective experience of more than 3 decades. Further, Tramboo family also operates a charitable hospital and a luxury hotel based in Kashmir. The social services and years of expertise done by the family has earned a reputation for trust and reliability by the local people in Kashmir.
The operations of the company were impacted significantly in FY20 on account of disruption in the valley because of the abrogation of the Article 370. However, post that, the company has witnessed a steady scale-up of operations, with the operating income gradually increasing by **% in FY21 and further by **% in FY22 (Prov.). The profitability margins of the company were also impacted owing to the disruption in FY20. The PBILDT and PAT margins stood at 8.69% and (-) 0.95% in FY20. However, the company has reported PBILDT and PAT margins of 10.93% and 3.18%, in FY21, respectively and 8.44% and 2.58%, in FY22, respectively. The improvement has been on the back of increased scale of operations leading to economies of scale and lower interest expenses incurred by the company.
The company derives its revenue from the distributors based in Jammu and Kashmir, thereby restricting its geographical reach in the same restricts the scale of operations for the company.Further, the company’s manufacturing facilities are based in District Khonmoh, Srinagar, J&K, and are thus exposed to geopolitical situations in the area which has resulted in continued shutdown of operation for long periods of time.
KIPL’s EBITDA/tonne remains exposed to its ability to maintain its operating parameters amid the inherent cyclical trends in the demand for and supply of cement and fluctuations in prices of inputs such as pet coke, coal and diesel. However, company benfits from its established association with its suppliers and the proximity of manufacturing unit within a vicinity of 400 Mtrs from the Limestone querries.
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: BWR may revise the ratings upward in case scale of operations witnesses a significant increase, profitability margins improves from the current levels and the overall solvency profile of the company also improves on a significant basis.
Negative: BWR may revise the ratings downwards if the company’s gearing deteriorates, profitability margins decline significantly and operating income declines substantially going forward.
LIQUIDITY INDICATORS - Adequate
The company's liquidity position continues to remain adequate as indicated by healthy net cash accrual at Rs.18.35Crsagainst CPLTD of Rs.5.24Crs in FY22 (Prov.). The company has a debt repayment obligation of Rs.5.33 Cr. in FY23, which is expected to be met through the internal accruals. Further the company has generated an average OPBDIT of Rs.22.79Crs for FY19~22 against the average interest obligation of Rs.7.97Crs for FY19~22, which provides cushion to the liquidity position of the company. The fund-based working capital utilization stood at 78% in the 6 months ending March 2022 with average utlization of 59.80% for the last 3 months ending March 2022. The cash conversion cycle of the company has improved to 46 days in FY22 (Prov.) from 98 days in FY21 and 146 days in FY20 on account of improved GCA days.
ABOUT THE ENTITYIncorporated in 1982, Khyber Industries Pvt Ltd is involved in the manufacturing of grey cement. The company is run and managed by the Tramboo Family. The manufacturing facilities of the company are based in District Khonmoh, Srinagar, J&K. The company has an installed capacity of 1580 TPD ( Tons Per Day). The company promotes its cement under the Brand name “ Khyber” manufactured by adhering strictly to the BIS guidelines.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 21-22 (Provisional) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 300.47 | 239.49 |
EBITDA | Rs.Crs. | 25.35 | 26.18 |
PAT | Rs.Crs. | 7.76 | 7.62 |
Tangible Net Worth | Rs.Crs. | 92.34 | 84.54 |
Total Debt/Tangible Net Worth | Times | 0.99 | 0.85 |
Current Ratio | Times | 0.85 | 1.04 |
Nil
ANY OTHER INFORMATIONNIl
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 | 110.12 |
BWR BBB-/Stable
(Upgrade) |
18May2021 |
BWR BB Stable
(Downgrade/ISSUER NOT COOPERATING*) |
16Apr2020 |
BWR BB+Stable
(Assignment) |
NA |
NA
|
Fund Based | ST | 0.00 |
NA
|
18May2021 |
BWR A4
(Downgrade/ISSUER NOT COOPERATING*) |
16Apr2020 |
BWR A4+
(Assignment) |
NA |
NA
|
Non Fund Based | ST | 1.00 |
BWR A3
(Upgrade) |
18May2021 |
BWR A4
(Downgrade/ISSUER NOT COOPERATING*) |
16Apr2020 |
BWR A4+
(Assignment) |
NA |
NA
|
Grand Total | 111.12 | (Rupees One Hundred Eleven Crores and Twelve lakhs Only) |
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 CriteriaAnalytical Contacts | |
---|---|
Neha Jain Senior Rating Analyst Board : +91 11 2341 2232 neha.j@brickworkratings.com |
Sudeep Sanwal Associate Director - Ratings sudeep.s@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | Jammu and Kashmir Bank | Cash CreditSanctioned | 35.00 | _ | 35.00 |
2 | Jammu and Kashmir Bank | Loans against PropertyOut-standing | 53.74 | _ | 53.74 |
3 | Jammu and Kashmir Bank | Short Term Working Capital LoanSanctioned | _ | _ | 0.00 |
4 | Jammu and Kashmir Bank | Bank GuaranteeSanctioned | _ | 1.00 | 1.00 |
5 | Jammu and Kashmir Bank | Common Covid Emergency Line of Credit (CCECL)Out-standing | 21.38 | _ | 21.38 |
Total | 110.12 | 1.00 | 111.12 | ||
TOTAL (Rupees One Hundred Eleven Crores and Twelve lakhs Only) |
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About Brickwork RatingsBrickwork 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 11,541 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.
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