BSL Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 356.58 Crs. of BSL Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (29 Nov 2021)	Present
Fund Based	90.38	251.68	Long Term	BWR BBB+/Stable Reaffirmation and change in Outlook	BWR BBB + /Stable Reaffirmation
Fund Based	89.50	67.50	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
Non Fund Based	37.40	37.40	Short Term	BWR A2 Reaffirmation	BWR A2 Reaffirmation
Grand Total	217.28	356.58	(Rupees Three Hundred Fifty Six Crores and Fifty Eight 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
*** This rating pertains to an existing assignment received prior to 6 October 2022.

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has reaffirmed the long-term rating at BWR BBB+ and the short-term rating reaffirmed at BWR A2 for the bank loan facilities of BSL Limited (BSL or the company).

The rating reaffirmation continues to factor in the extensive experience of the management, established position of the company as an integrated textile player in India on account of being part of LNJ Bhilwara group, established brand in domestic and exports market, improved scale of operations and decent order book position, comfortable debt protection metrics, besides improved profit margins in FY22. However, the ratings are constrained by working capital intensive operations, high gearing, foreign exchange and raw material price fluctuations risk.

KEY RATING DRIVERS

Credit Strengths:

Experienced management and group strength :
BSL Limited has well experienced directors and independent directors, having long experience in the textile industry. Shri Arun Churiwal (Chairman & Managing Director) and Shri Nivedan Churiwal (Joint Managing Director) have more than three and two decades of experience respectively in the textile sector. BSL is part of the LNJ Bhilwara group providing the much needed synergy and support from the common promoters of the group.
Scale of operations and decent order book position :
Total operating income (TOI) of the BSL has improved from Rs 321.42 Crs in FY21 to Rs 435.84 Crs in FY22 owing to pent-up demand in FY22. The company has an order book of Rs 133.40 Crs as on 31 Aug 2022 and would be executed for next four month.
Established brand position in the market :
BSL markets its products under the brands BSL Suitings, Linfab, Belfast and Geoffrey Hammonds. Their brand is well accepted both in domestic and international markets.
Comfortable debt protection metrics :
BSL’s Interest service coverage ratio (ISCR) has been improved from 1.72x in FY21 to 2.87x in FY22 due to improved EBITDA. DSCR is comfortable at 1.44x in FY22(1.31x in FY21).
Improved profit margins :
Net profit margins have improved from 0.42% in FY21 to 2.63%.Operating profit margins improved from 8.99% in FY21 to 9.16% in FY22. Improvement in margins led by decline in operating expenses in FY22 and better sales realization.
Comfortable current ratio :
The company’s current Ratio is comfortable at 1.22x in FY22 indicating company ability to meet its current liabilities from current assets.

Credit Risks:

Working capital intensive operations :
Conversion Cycle is high at 149 days in FY22 (157 days in FY21) due to a high inventory period of 135 days in FY22 (179 days in FY21). Elongated operating cycles could result in stress in liquidity, though it has been shortened in FY22 against FY21.
Modest capital structure :
The company has high gearing (debt/net worth), at 2.12x in FY22 (2.07x in FY21). Gearing is expected to increase in FY23 against FY22 with the addition to new term loans for capex in FY23 and likely to remain high in the medium term.
Foreign exchange fluctuations risk :
Exports continue to be a major contributor to the total income accounting for approximately 57% of the sales in FY22, which exposes the company to foreign exchange fluctuation risk. The company mitigates the risk through back-to-back forward contracts.
Raw Material Fluctuation Risk :
Raw material prices of polyester, viscose, polyester viscose blended yarn, silk and wool are susceptible to price fluctuation risk owing to uncertainty of supply-demand in the market. The price of the raw material is also linked to the other factors beyond management’s control like agro climatic, political, government interference, pandemic situation etc. However, the company sources most of the raw material from reputed suppliers RSWM Ltd. (group company), Grasim Industries and Reliance Industries Ltd which some way offset the risk. Further fierce competition from peers in the textile industry and substitutes in the market could adversely affect the profit margins in future.

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating. Reference may be made to the detailed Rating Criteria hyperlinked

RATING SENSITIVITIES

Upward : The outlook may be revised to positive or the rating may be upgraded if there is improvement in gearing ratio to a comfortable level, besides improvement in the scale of operations and financial risk profile of the company.

Downward : BWR may revise the ratings downwards if the company achieves notably lower revenue than expected and deterioration in debt protection metrics and liquidity.

LIQUIDITY INDICATORS - Adequate

The company had improved cash accruals (profit after tax + depreciation) of Rs 23 Crs in FY22 (PY:13.53) against current portion of long term debt (CPLTD) of Rs 11.70 Crs for FY22. BWR is expecting cash accruals of more than Rs 23 Crs in FY23 against CPLTD of Rs 12.92 Crs for FY23. The average utilization of working capital limits is around 80% allowing the company to use unused portions of sanctioned fund based limits in case of need and scale up of operations. The company has a comfortable current ratio of 1.22x in FY22.

ABOUT THE ENTITY

Incorporated in 1970 at Bhilwara, Rajasthan, BSL Ltd. is engaged in manufacturing a wide range of yarns and fabrics including woollen/worsted yarn, synthetics yarn, blended viscose fabrics,silk fabrics, furnishing and fashion fabrics. The company exports to around 54 countries located primarily in North and South America, Europe, Middle East and the Far East.BSL Ltd. is listed on BSE and NSE.

The Company has currently two wind power plants of 2.4 MW (for outside sales) and 2 MW capacity (for captive use) located in Village Gorera, Jaisalmer and Village Ola, Jaisalmer respectively and generation of wind power contributes around 0.28% of total revenue It has also already installed a 4.17 MW rooftop solar plant at its existing site under OPEX Model. BSL Ltd. is promoted by Mr. L N Jhunjhunwala, Chairman of LNJ Bhilwara group and is managed by Mr. A K Churiwal (Chairman and Managing director). Shri Nivedan Churiwal is the Joint Managing Director, Shri Ravi Jhunjhunwala and Shri Shekhar Agarwal are the other directors. Shri Sushil Jhunjhunwala, Shri A.N. Choudhary, Shri G P Singhal and Smt. Abhilasha Mimani are the independent directors.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	435.84	321.42
EBITDA	Rs.Crs.	39.92	28.91
PAT	Rs.Crs.	11.48	1.36
Tangible Net Worth	Rs.Crs.	87.67	78.13
Total Debt/TNW	Times	2.12	2.07
Current Ratio	Times	1.22	1.22

KEY COVENANTS OF THE FACILITY RATED

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

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	251.68	BWR BBB+/Stable (Reaffirmation)	29Nov2021	BWR BBB+Stable (Reaffirmation and change in Outlook)	27Oct2020	BWR BBB+Negative (Reaffirmation and change in Outlook)	11Sep2019	BWR BBB+ Stable (Reaffirmation)
Fund Based	ST	67.50	BWR A2 (Reaffirmation)	29Nov2021	BWR A2 (Reaffirmation)	27Oct2020	BWR A2 (Reaffirmation)	11Sep2019	BWR A2 (Reaffirmation)
Non Fund Based	ST	37.40	BWR A2 (Reaffirmation)	29Nov2021	BWR A2 (Reaffirmation)	27Oct2020	BWR A2 (Reaffirmation)	11Sep2019	BWR A2 (Reaffirmation)
Grand Total		356.58	(Rupees Three Hundred Fifty Six Crores and Fifty Eight lakhs Only)

*** This rating pertains to an existing assignment received prior to 6 October 2022. 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
Raman Thakur Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com	Kewal Krishan Singla Director - Ratings kewalsingla@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

BSL 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	Bank of Maharashtra	Term Loan - Sanctioned	45.00	_	45.00
2	Export Import Bank of India	Term Loan - Sanctioned	12.75	_	12.75
3	IDBI Bank	Cash Credit - Sanctioned	8.50	_	8.50
4	IDBI Bank	Forward Contract - Sanctioned	_	3.90	3.90
5	IDBI Bank	ILC/FLC/BG - Sanctioned	_	10.00	10.00
6	IDBI Bank	PC/PCFC - Sanctioned	_	18.50	18.50
7	IDBI Bank	GECL 2.0 - Out-standing	4.46	_	4.46
8	Indian Bank	Term Loan - Sanctioned	92.25	_	92.25
9	Punjab National Bank	Forward Contract - Sanctioned	_	1.60	1.60
10	Punjab National Bank	Cash Credit - Sanctioned	22.00	_	22.00
11	Punjab National Bank	GECL 2.0 - Out-standing	8.56	_	8.56
12	Punjab National Bank	PC/PCFC - Sanctioned	_	27.00	27.00
13	Punjab National Bank	ILC/FLC/BG - Sanctioned	_	12.00	12.00
14	State Bank Of India (SBI)	PC/PCFC - Sanctioned	_	22.00	22.00
15	State Bank Of India (SBI)	GECL 2.0 - Out-standing	13.25	_	13.25
16	State Bank Of India (SBI)	Term Loan - Out-standing	7.91	_	7.91
17	State Bank Of India (SBI)	Forward Contract - Sanctioned	_	1.90	1.90
18	State Bank Of India (SBI)	ILC/FLC/BG - Sanctioned	_	8.00	8.00
19	State Bank Of India (SBI)	Cash Credit - Sanctioned	37.00	_	37.00
Total			251.68	104.90	356.58
TOTAL (Rupees Three Hundred Fifty Six Crores and Fifty Eight lakhs Only)

* This rating pertains to an existing assignment received prior to 6 October 2022.

Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, 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. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.