Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 87.03 Crs. of Maruti Papers Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (30 Sep 2021) |
Present | ||
Fund Based | 74.67 | 76.53 | Long Term |
BWR BBB /Stable
Reaffirmation |
BWR BBB
/Stable Reaffirmation |
(1.50) | (0.00) | ||||
Non Fund Based | 2.50 | 10.50 | Short Term |
BWR A3+
Reaffirmation |
BWR A3 +
Reaffirmation |
(10.00) | (0.00) | ||||
(10.00) | (0.00) | ||||
(0.00) | (2.00) | ||||
Grand Total | 77.17 | 87.03 | (Rupees Eighty Seven Crores and Three lakhs Only) |
Brickwork Ratings (BWR) reaffirms the long term rating of "BWR BBB / Stable" and reaffirms the short term rating of "BWR A3+" for the bank loan facilities of 'Maruti Papers Ltd.".
BWR has essentially relied upon the audited financial statements of "Maruti Papers Ltd." of FY19, FY20, FY21, CA Certified provisional financials of FY22, and projected financial statements of FY23, FY24, publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the Promoters, established track of operations and moderate financial risk profile. However, the rating is constrained by high competition from other established players, raw material price fluctuation risk and declining profit margins in FY22.
BWR believes that "Maruti Papers Ltd.", 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 the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERSCredit Strengths:
Family Run business with the promoters experience of more than three decades in the kraft paper manufacturing business. The company has long existence for 34 years and exhibits a proven track record of experience in the operations, manufacturing, sales and running the business. The product line has been supported by suppliers who have been associated with the company for around 10 years and have been helping the company to achieve scale in operations and manufacturing. The customer base includes parties who are also associated since past 10 years. Moreover, there is no reliance on few customers and suppliers.
The Total Operating Income of the company was increased marginally from Rs, 244.14 Crs in FY20 to Rs. 253.91 Crs in FY21. Further, The company has achieved revenue of Rs. 413.15 Crs in FY22 (Provisionally), an increase in revenue of 63%.
The company is generating moderate profit margins. Net Profit Margin improved marginally from 1.67% in FY20 to 1.90% in FY21. The Operating Profit Margin of the company has declined from 7.22% in FY20 to 6.96% in FY21. With the increasing operating expenses and increasing raw material prices, the profit margins has been declined in FY22 (Provisionally).
ISCR and DSCR of the company stood comfortable at 3.91 times and 2.08 times respectively in FY21. The company has been generating sufficient net cash accruals for debt-servicing and hence liquidity position is satisfactory.
Cash conversion cycle stood comfortable at 68 days in FY21 on account of reasonable receivable days of 76 days and Inventory period of 25 days. The company has moderate gearing of 1.99 times (Total Debt/Tangible Net Worth) in FY21 on the back of increasing net worth.
The Packaging Industry and Kraft paper manufacturing industry is marked by intense competition from small and large players co-existing in the country. Moreover, the entry barriers in the industry are low and hence business risk persists.
The company is susceptible to price raw material fluctuation risk. The major raw material includes scrap/used papers; the prices of these are volatile, depending on the demand-supply situation domestically and globally. Any increase in the price, if not passed through, may adversely affect the company’s profit margins.
Standalone approach has been adopted and BWR has applied its rating methodology as detailed in the rating criteria (hyperlinks provided at the end of the rationale).
RATING SENSITIVITIES
Going forward, the company's ability to maintain the consistency in revenue growth, improve current ratio and profit margins would be key sensitivities over short to medium term.
Positive: The rating outlook may be revised to positive and the rating may be upgraded if the company is able to improve current ratio and improve the profit margins of the company, besides achieve its projections.
Negative: The rating may be downgraded if the company achieve lower revenue than projected financials.
LIQUIDITY INDICATORS - Adequate
The current ratio of the company was adequate at 1.53 times as on 31 March 2021 as against 1.40 times as on 31 March 2020. The company had a moderate conversion cycle of 68 days in FY21. Net cash accruals to total debt stood at 0.18 times as on 31 March 2021 as against 0.20 times as on 31 March 2020. Cash and Ban Balance of the company was on lower side with Rs. 0.04 Crs in FY21. However as per FY22, provisional financials, the Cash and Bank Balance is Rs. 2.28 Crs. The average working capital utilization of the company stood at ~ 68% for the last six months during January 2022 to June 2022. The company is having adequate margin and hence the working capital utilization is moderate. The ISCR of the company was comfortable levels with 3.91 times in FY21 and the DSCR of the company was adequate levels with 2.08 times in FY21.
ABOUT THE ENTITYMaruti Papers Limited was incorporated in 1988 with registered office in Shamli, Uttar Pradesh. Maruti Papers Limited is a public limited company engaged in the production of eco-friendly recycled multilayer kraft paper. The company is based out of Uttar Pradesh and has a vintage of 34 years in the business. The company sells its products in Delhi, UP, Haryana, Rajasthan, etc and also exports to UAE, UK & China. The business is managed by Mr. Rajeshwar Bansal and his family who are also the promoters of the company.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 253.91 | 244.14 |
EBITDA | Rs.Crs. | 17.66 | 17.63 |
PAT | Rs.Crs. | 4.81 | 4.07 |
Tangible Net Worth | Rs.Crs. | 32.99 | 28.17 |
Total Debt/TNW | Times | 1.99 | 2.26 |
Current Ratio | Times | 1.53 | 1.40 |
The terms of sanction include standard covenants normally stipulated for such facilities.
NIL
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 | 76.53 |
BWR BBB/Stable
(Reaffirmation) |
30Sep2021 |
BWR BBB Stable
(Reaffirmation) |
19Nov2020 |
BWR BBB Stable
(Reaffirmation) |
23Sep2019 |
BWR BBB Stable
(Assignment) |
Non Fund Based | ST | 10.50 |
BWR A3+
(Reaffirmation) |
30Sep2021 |
BWR A3+
(Reaffirmation) |
19Nov2020 |
BWR A3+
(Reaffirmation) |
23Sep2019 |
BWR A3+
(Assignment) |
NFB SubLimit | ST | (2.00) |
BWR A3+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 87.03 | (Rupees Eighty Seven Crores and Three 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.
Analytical Contacts | |
---|---|
Soubhagya Ranjan Kahalsingh Ratings Analyst Board : +91 80 4040 9940 soubhagya.rs@brickworkratings.com |
Ramesh N Associate Director - Ratings ramesh.n@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 | State Bank Of India (SBI) | Term LoanOut-standing | 13.23 | _ | 13.23 | |
2 | State Bank Of India (SBI) | Term LoanOut-standing | _ | _ | 0.00 | |
3 | State Bank Of India (SBI) | Term LoanSanctioned | _ | _ | 0.00 | |
4 | State Bank Of India (SBI) | Cash CreditSanctioned | 37.50 | _ | 37.50 | |
Sub-Limit (Fund Based- SBLC) Sanctioned | (0.00) | |||||
Sub-Limit (LC) Sanctioned | (0.00) | |||||
Sub-Limit (SBLC-sublimit of LC) Sanctioned | (0.00) | |||||
5 | State Bank Of India (SBI) | Standby Line of CreditSanctioned | 1.50 | _ | 1.50 | |
6 | State Bank Of India (SBI) | Bank GuaranteeSanctioned | _ | _ | 0.00 | |
7 | State Bank Of India (SBI) | Derivative LimitSanctioned | _ | 0.50 | 0.50 | |
8 | State Bank Of India (SBI) | Adhoc Facilities FB (CC/TL/OD)Sanctioned | 12.50 | _ | 12.50 | |
9 | State Bank Of India (SBI) | CECLOut-standing | _ | _ | 0.00 | |
10 | State Bank Of India (SBI) | GECLOut-standing | 6.80 | _ | 6.80 | |
11 | State Bank Of India (SBI) | GECLOut-standing | 5.00 | _ | 5.00 | |
12 | State Bank Of India (SBI) | ILC/FLCSanctioned | _ | 10.00 | 10.00 | |
Sub-Limit (Bank Guarantee) Sanctioned | (2.00) | |||||
Total | 76.53 | 10.50 | 87.03 | |||
TOTAL (Rupees Eighty Seven Crores and Three lakhs Only) |
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