RATING RATIONALE
27Jul2022

POCL Enterprises Ltd.

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 85.07 Crs. of POCL Enterprises Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(26 Jul 2021)
Present
Fund Based 55.18 60.77 Long Term BWR BBB- /Stable
Reaffirmation
BWR BBB /Stable
Upgrade
(0.00) (25.00)
(0.00) (10.00)
13.00 13.00 Short Term BWR A3
Reaffirmation
BWR A3 +
Upgrade
Non Fund Based 11.30 11.30 Short Term BWR A3
Reaffirmation
BWR A3 +
Upgrade
(0.00) (25.00)
(0.00) (25.00)
Grand Total 79.48 85.07 (Rupees Eighty Five Crores and 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

The rating action for POCL Enterprises Ltd. ('POEL' or 'the company') reflects the better-than-expected performance in fiscal 2022, driven by demand recovery and cost efficiency measures. Brickwork Ratings (BWR) believes that the business and financial profile shall continue to be maintained over the medium term supported by steady demand for its products. BWR also notes the company's ability to secure incremental orders from one of its key existing clients, augmenting the company's growth plans. The improvement in business performance is reflected in 56% YOY growth in revenue to Rs.498 Crs in FY22 backed by volumetric growth across all the business segments. The improved scale of operations and firmed up prices have supported ~44% YOY growth in EBITDA in FY22.

The ratings continue to be supported by the experience of the management, established track record in the industry with a long association with its suppliers and customers. However, the ratings remain constrained due to susceptibility of margins to fluctuation in raw material prices, vulnerability to global demand-supply, cyclicality of end user industries and geopolitical scenario, regulatory risk, foreign exchange rate fluctuations and working capital intensive operations.   

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes POCL's business risk profile will be maintained over the medium term. The outlook may be revised to 'Positive' if a sustained increase in the scale of operations, higher than envisaged profitability, efficient management of its working capital and improved gearing and debt coverage metrics result in an improved financial risk profile. The outlook may be revised to 'Negative' if lower than expected revenue or profitability, stretch in liquidity, sizeable and unanticipated Capex or weakening gearing adversely impact the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, Brickwork Ratings has applied its rating methodology as detailed at the end of the document. The company does not have any subsidiary, associate or holding company as on 31Mar2022.

RATING SENSITIVITIES

The ability of the company to significantly increase its scale of operations while also improving its profitability and gearing on a sustainable basis would be key rating sensitivity. Keeping in view the ongoing capex through internal accruals and increase in debt repayments, the proposed improvement in the company's EBIDTA and net cash accrual remains a key monitorable.

Upward:

Downward:

LIQUIDITY INDICATORS - Adequate

The liquidity profile is considered adequate as reflected in moderate working capital utilisation, net cash accruals and cash & cash equivalents. The EBITDA was adequate to cover the finance charges in FY22. Net cash accruals in FY22 is adequately covering the debt repayments and a similar trend is expected in FY23 and FY24. The average working capital limit utilization was ~70% in the past  6 months. Cash & cash equivalents were modest at ~Rs. 3.20 Crs. as on 31Mar2022. The current ratio improved to 1.22 times as on 31Mar22 from 1.20 times as on 31Mar21. The cash conversion cycle improved from 79 days as on 31Mar21 to 59 days as on 31Mar22

ABOUT THE ENTITY

POCL Enterprises Limited ('POEL' or 'The company') was initially established on 20May1988 for trading of chemicals in Chennai. POEL is an ISO 9001:2015 company and specializes in manufacturing and trading of various metals, metal oxides and plastic additives. The company has manufacturing units in Puducherry (two), Kakkalur – Thiruvallur and Maraimalai Nagar, Tamil Nadu. The company’s shares are listed on BSE Ltd. Exports contributed ~42% of total sales in FY22. Metals, plastic additives and metal oxides contributed ~73%, ~12% and ~15% of net sales in FY22.

Mr. Harish Kumar Lohia is the Non-Executive Chairperson. Mr. Devkar Bansal and Mr. Sunil Kumar Bansal are the Managing Directors.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 497.83 318.88
EBITDA Rs.Crs. 11.31 7.85
PAT Rs.Crs. 3.37 1.45
Tangible Net Worth Rs.Crs. 38.63 35.18
Total Debt/TNW Times 2.21 2.41
Current Ratio Times 1.22 1.20
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

Not applicable

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 60.77
BWR BBB/Stable
(Upgrade)
26Jul2021
BWR BBB- Stable
(Reaffirmation)
27Nov2020
BWR BBB- Stable
(Reaffirmation)
15Apr2019
BWR BBB- Stable
(Reaffirmation)
FB SubLimit LT (25.00)
BWR BBB/Stable
(Upgrade)
26Jul2021
BWR BBB- Stable
(Reaffirmation)
NA
NA
NA
NA
(10.00)
BWR BBB/Stable
(Upgrade)
26Jul2021
BWR BBB- Stable
(Reaffirmation)
NA
NA
NA
NA
Fund Based ST 13.00
BWR A3+
(Upgrade)
26Jul2021
BWR A3
(Reaffirmation)
27Nov2020
BWR A3
(Reaffirmation)
15Apr2019
BWR A3
(Reaffirmation)
Non Fund Based ST 11.30
BWR A3+
(Upgrade)
26Jul2021
BWR A3
(Reaffirmation)
27Nov2020
BWR A3
(Reaffirmation)
15Apr2019
BWR A3
()
NFB SubLimit ST (25.00)
BWR A3+
(Upgrade)
26Jul2021
BWR A3
(Reaffirmation)
NA
NA
NA
NA
(25.00)
BWR A3+
(Upgrade)
26Jul2021
BWR A3
(Reaffirmation)
NA
NA
NA
NA
Grand Total 85.07 (Rupees Eighty Five Crores and Seven 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

Vineet Krishnan Nair

Senior Ratings Analyst vineet.kn@brickworkratings.com

Saakshi Kanwar

Senior Manager Ratings saakshi.k@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
POCL Enterprises 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 Cash CreditSanctioned 17.70 _ 17.70
Sub-Limit (WCDL) Sanctioned (10.00)
2 Canara Bank PC/PCFC/FDB/BRD/FBESanctioned _ 13.00 13.00
3 Canara Bank Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 6.70 _ 6.70
4 Canara Bank Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 3.49 _ 3.49
5 Canara Bank ILC/FLC/BGSanctioned _ 5.30 5.30
6 HDFC Bank Standby LC/ILC/FLC/BGSanctioned _ 6.00 6.00
7 HDFC Bank Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 2.74 _ 2.74
8 HDFC Bank Emergency Credit Line Guarantee Scheme (ECLGS)Sanctioned 5.14 _ 5.14
9 HDFC Bank Cash CreditSanctioned 25.00 _ 25.00
Sub-Limit (Post Shipment Finance) Sanctioned (25.00)
Sub-Limit (Pre Shipment Finance) Sanctioned (25.00)
Sub-Limit (Working Capital Demand Loan) Sanctioned (25.00)
Total 60.77 24.30 85.07
TOTAL (Rupees Eighty Five Crores and Seven lakhs Only)
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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 12,000 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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