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

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	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.

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