Citizen Umbrella Manufacturers Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities aggregating Rs. 43.00 Crs. of Citizen Umbrella Manufacturers Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (18 Feb 2021)	Present
Fund Based	13.00	13.00	Long Term	BWR BBB-/Stable Upgrade	BWR BBB - /Stable Reaffirmation
Non Fund Based	30.00	30.00	Short Term	BWR A3 Upgrade	BWR A3 Reaffirmation
Non Fund Based	(2.00)	(2.00)	Short Term	BWR A3 Upgrade	BWR A3 Reaffirmation
Grand Total	43.00	43.00	(Rupees Forty Three Crores 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

Based on a review, BWR has reaffirmed the rating of the long term bank loan facilities of Citizen Umbrella Manufacturers Ltd. of Rs 13.00 Crs. at BWR BBB-, with a stable outlook, and has reaffirmed the rating for their short term bank loan facilities of Rs. 30.00 Crs. at BWR A3.

The reaffirmation of the rating factors in management experience and long standing market presence, comfortable debt protection metrics and financial risk profile and low supplier and customer concentration risk. However, the rating is constrained by a moderate scale of operations, sourcing of some portion of raw materials from abroad, intense competition in the industry and an elongated Conversion cycle.

BWR believes that the business risk profile of the company will be maintained over the medium term. The ‘stable’ outlook indicates a low likelihood of the rating change over the medium term. The rating outlook may be advised to “Positive” in case there is a significant improvement in revenue, and profit margin going forward. The rating outlook may be revised to “Negative” if there is a deterioration in the financial risk profile including liquidity or any unforeseen circumstances.

KEY RATING DRIVERS

Credit Strengths:

Management experience and long standing market presence :
The directors of the company have an experience of more than two decades each, on an average. Mr. Mahesh Kumar Banthia, Mr. Suresh Kumar Banthia and Mr. Santosh Kumar Banthia are associated for more than 30 years with the company. The company has had its market presence since 1996, which along with management experience, provides and will continue to provide a competitive edge to the company. The amalgamation of the group companies has strengthened the company’s process reengineering and is likely to contribute in reduction of operational cost resulting into boosting of the bottom line and other financial parameters.
Comfortable debt protection metrics and financial risk profile :
The financial indicators in FY21 have been satisfactory however deteriorated marginally as compared to FY 20 as shown by the net-profit margin of 6.50 % in FY 21 against 6.87 % in FY 20, operating profit margin of 15.20 % in FY 21 against 17.36 % in FY 20, current ratio of 2.16 times in FY 21 against 2.61 times in FY 20, gearing ratio of 0.52 times in FY 21 against 0.65 times 0.85 times in FY20 . Such variation is observed almost in all industries across the country during FY 21. As per the provisional financials for FY22 there has an improvement in financial performance as indicated by Net Profit margin and Operating Margin of 9.29% and 17.58% respectively and the gearing and Current ratio of 0.79 times and 2.08 times respectively. The company’s ISCR and DSCR are at comfortable levels in FY21 at 4.25 times and 2.55 times respectively as compared to 4.09 times and 3.49 times respectively in FY20. In FY22, the DSCR and ISCR are at 3.62 times and 7.41 times respectively.
Supplier and customer concentration risk :
The supplier and customer concentration risk is negligible as evident from top 5 clients and suppliers of the company which is less than 25.00% of the client and the supplier base of the company respectively.

Credit Risks:

Moderate scale of operations :
The scale of operation deteriorated in FY21 to Rs. 182.93 Crs as against Rs. 217.93 Crs in FY 20 due to Covid-19 Pandemic. However, it has improved to Rs 259 crore as per the provisional financials in FY22 due to normalisation of operation. The scale is expected to remain small with marginal growth because of the highly competitive and fragmented nature of the industry.
Sourcing of some portion of raw materials from abroad :
Despite the industry’s long existence of six decades, the Indian manufacturers are still dependent to some extent on the Chinese and Taiwanese imports of fabrics, ribs and shafts which are generally available at cheaper rates. This exposes the company to some degree of forex risk and risk of disruption of supplies. The risk has been mitigated to some extent with the availability of FCL from Banks.
Intense competition in the industry :
The umbrella manufacturing market is largely dominated by small and unorganised players along with reputed brands, and the competitive environment is pushing the key players for new development in the umbrella market, which is propelling the demand. However, pricing flexibility is limited on account of the competition. Company is thereby depending upon the import of fabrics, ribs and shafts to some extent. Management expertise and efficiency and market presence of the company is likely to contribute to meet the market competition
Elongated Conversion cycle :
The company has elongated inventory and debtor day and accordingly, there is a lag in receipt of payments.The working capital requirement for the company is moderate and in FY21 the cycle has increased to 246 days from 168 days in FY20 mainly due to the increase in inventory days to 179 days from 127 days in FY20 there was an increase in overall working capital cycle.

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Positive: The rating may be upgraded in case of an increase in sales volume and improvement in margins and debt protection metrics of the company.

Negative: Any delays in servicing of debt obligations, deterioration in liquidity and debt protection metrics, and decline in sales volumes, may lead to negative rating action.

LIQUIDITY INDICATORS - Adequate

Net Cash Accruals of the company stood at Rs. 19.25 crs as on 31 March 2021 against 24.71 in FY20 and Current Ratio stood at 2.08 times in FY 22 against 2.16 times in FY 21. The company will be in a position to service in debt obligations from its cash accruals of Rs. 34.45 Crs as per provisional FY22. Total cash & cash equivalent balance as on 31 March 2021 was Rs. 5.54 crs against Rs. 9.37 Crs in FY20. Average utilisation of Cash Credit limits is about 10% in the last 12 months ending April 2022 and the other working capital facilities were also utilised at about 50%. The ISCR & DSCR stood at 4.25 times and 4.09 times respectively in FY 21 against 4.09 times and 3.49 times respectively in FY 20.

ABOUT THE ENTITY

Citizen Umbrella Manufacturers Ltd (CUML) was incorporated on 28 June 1996 with its registered office at Kolkata, West Bengal. The company is engaged in manufacturing umbrellas and its spare parts. The product range of the company includes regular umbrellas, folding umbrellas, garden umbrellas, corporate umbrellas and umbrella accessories. The company has its physical presence in Kolkata, Mumbai and Gujarat and serves pan India. Mumbai and Gujarat are the branch offices of the company. Manufacturing units are located at Umbergaon, Surat and Kolkata. The directors of the company are Mr. Jitesh Kumar Banthia, Mr. Mahesh Kumar Banthia, Mr. Suresh Kumar Banthia, Mr. Naresh Kumar Banthia, Mr. Gaurav Banthia, Mr. Santosh Kumar Banthia, Mr. Pankaj Vimal Jain, Mr. Naman Banthia and Mr. Jatin Hiralal Savla.The company was merged on 24 March 2021 and merged financials has been considered for FY21 and FY22.

KEY FINANCIAL INDICATORS

Standalone Financial Indicators (in ₹ crore)	Units	FY 21-22 (P)	FY 20-21 (A)
Operating Revenue	Rs.Crs.	259.65	182.93
EBITDA	Rs.Crs.	45.65	27.80
PAT	Rs.Crs.	24.11	11.89
Tangible Net Worth	Rs.Crs.	160.95	136.82
Total Debt/Tangible Net Worth	Times	0.59	0.52
Current Ratio	Times	2.08	2.16
* A:Audited UA:Unaudited P:Provisional PROJ:Projected
Note: these are latest available financial results. All ratios as per BWR's calculations; Amount in ₹ crore

KEY COVENANTS OF THE FACILITY RATED

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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ANY OTHER INFORMATION

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	13.00	BWR BBB-/Stable (Reaffirmation)	18Feb2021	BWR BBB-Stable (Upgrade)	NA	NA	31May2019	BWR BB+Stable (Downgrade/ISSUER NOT COOPERATING*)
Non Fund Based	ST	30.00	BWR A3 (Reaffirmation)	18Feb2021	BWR A3 (Upgrade)	NA	NA	31May2019	BWR A4+ (Downgrade/ISSUER NOT COOPERATING*)
NFB SubLimit	ST	(2.00)	BWR A3 (Reaffirmation)	18Feb2021	BWR A3 (Upgrade)	NA	NA	31May2019	BWR A4+ (Downgrade/ISSUER NOT COOPERATING*)
Grand Total		43.00	(Rupees Forty Three Crores Only)

Rating Advisory, as on 22Feb2022
Press Release, as on 22Feb2022
A press release was issued by us on 22 February 2022 on account of non-receipt of essential information required for review.

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
Mrinal Kanti Sarkar Ratings Analyst mrinal.s@brickworkratings.com	Dipak Kumar Das dipakkumar.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Citizen Umbrella Manufacturers 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	Tamilnad Mercantile Bank Limited	Cash Credit - Sanctioned	13.00	_	13.00
2	Tamilnad Mercantile Bank Limited	FLC/FCL/WCDL - Sanctioned	_	30.00	30.00
	Sub-Limit (BG/ILC) - Sanctioned		(2.00)
Total			13.00	30.00	43.00
TOTAL (Rupees Forty Three Crores Only)

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