Greenchef Appliances Limited

Brickwork Ratings upgrades the long term rating and reaffirms the short term rating and removes the ratings from the "Issuer Not Cooperating" category for the Bank Loan Facilities of Rs. 53.43 Crs. of Greenchef Appliances Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Nov 2022)	Present
Fund Based	0.00	51.93	Long Term	BWR B- /Stable Continues to be in ISSUER NOT COOPERATING Category*/Reaffirmed	BWR BB + /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based	0.00	1.50	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING Category*/Reaffirmed	BWR A4 removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total	0.00	53.43	(Rupees Fifty Three Crores and Forty Three 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

Brickwork Ratings (BWR) upgrades the long term rating to "BWR BB+ / Stable" and reaffirms the short term rating of "BWR A4" along with removal of the ratings from the "issuer Not Cooperating" category for the bank loan facilities of "Greenchef Appliances Limited".

BWR has essentially relied upon the audited financial statements of "Greenchef Appliances Limited" of FY20, FY21,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 promoting directors, established track of operations, significant improvement in revenue in FY 22 and moderate financial risk profile. However, the rating is constrained by decline in PAT margin in FY22 along with intense competition with presence of several large players in home appliances and consumer electronics segment in india.

BWR believes that "Greenchef Appliances Limited" 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 DRIVERS

Credit Strengths:

Extensive experience of the Promoters Extensive and Established Market Position: :
The Promoting directors of the company were having more than a decade experience in manufacturing home appliances and consumer electronics With strong understanding of market dynamics and pan India distribution network will continue to support the business in long term.
Year on Year Revenue Growth :
The revenue of the company has increased from Rs. 237.54 Crs in FY20 to Rs. 238.93 Crs in FY21. The company has achieved revenue of Rs. 335.62 Crs, a growth of 40% in FY22.

Indigenous sales of the company have increased by 39.93% from Rs. 237.35 Crs in FY21 to Rs. 332.13 Crs in FY22.

Export sales of the company have increased by 134.22 % from Rs. 1.49 Crs in FY21 to Rs. 3.49 Crs in FY22.

The company has achieved sales of Rs. 264.36 Crs in 7 months in FY23 during April 2022 to October 2022.
Moderate Financial Risk Profile :
Capital structure remains comfortable with tangible net worth at Rs. 50.25 Crs and gearing remains moderate at 1.31 times as on 31 March 2022. ISCR has declined from 2.51 times in FY21 to 1.38 times in FY22 is largely due to decline in PAT coupled with increase in Interest charges. DSCR has declined from 2.16 times in FY21 to 1.52 times in FY22 is largely due to increase in debts and decline in operating profit in FY22. However ISCR is moderate and DSCR is at satisfactory level in FY22.
Improved Conversion Cycle in FY22 :
The conversion cycle of the company has improved from 109 days in FY21 to 85 days in FY22 is mainly due to decrease in receivable days from 91 days in FY21 to 68 days in FY22.
Wide Range of Product Portfolio and Geographical Diversification in Revenues :
The company has 25 categories of products in Household and Kitchenware segments and sells its products Pan India by its distribution networks and also exports few products to Sri Lanka. The company also sells its products online on e-commerce platforms like Amazon, Flipkart, etc.

Credit Risks:

Decline in PAT in FY22 :
The PAT of the firm has increased by 170.79% from Rs. 1.13 Crs in FY20 to Rs. 3.06 Crs in FY21. However, the PAT has declined by 83.33% from Rs. 3.06 Crs in FY21 to Rs. 0.51 Crs in FY22 mainly due to increase in operating costs along with increase in interest and finance charges, increase in freight and advertisement charges.
Diversified Industry with Intense competition :
The home appliances and consumer electronics market in india is largely diversified and intensely competitive with presence of several large players over the past few years. There has been significant price competition, which has adversely affected the operating profitability of most players. Additionally, raw material price fluctuations accentuate the pressure on profitability because of the players’ inability to pass on such cost increases to their customers. Therefore, profitability will remain a challenge for most players in the industry on account of intense competition and consolidation witnessed across large consumer players in the domestic market.

ANALYTICAL APPROACH - Standalone

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 ability of the company to improve its scale of operations by increasing its revenue growth and achieve its financial projections, improve its profit margins, manage working capital efficiency and prompt servicing of debt obligation shall remain key rating sensitivity.

Positive:

Sustained improvement in operating revenue and steady operating margin leading to higher net cash accruals.

Improvement in interest coverage ratio.

Efficient working capital management.

Negative:

Further stretch in working capital requirement or major debt-funded capital expenditure,

Weakening the financial risk profile by significant decline in revenue and operating margin leading to lower net cash accrual.

Deterioration in overall financial risk profile and key financial indicators would be negative for the ratings.

LIQUIDITY INDICATORS - Adequate

The current ratio of the company was adequate at 1.57 times as on 31 March 2022 as against 1.90 times as on 31 March 2021. Net Cash Accrual have been increased from Rs. 21. 19 Crs in FY21 to Rs. 42.40 Crs in FY22. Net cash accruals to long term debt improved from 0.86 times as on 31 March 2021 to 1.38 times as on 31 March 2022. Cash and Cash Equivalents of the Company has increased from Rs. 1.38 Crs in FY21 to 1.67 Crs in FY22. The average working capital utilization of the company was ~ 92% for the last six months. Working Capital for DSCR has increased from Rs. 81.52 Crs to Rs. 87.36 Crs in FY22. The company is in capex mode and undertaking construction of factory building.

ABOUT THE ENTITY

GreenChef Appliances Limited was incorporated in June, 2010 with its registered office situated at Peenya Industrial Area, Bangalore, Karnataka. The company has three manufacturing units out of which two are in Bengaluru, Karnataka and one in Solan, Himachal Pradesh. The company is ISO 9001: 2008 Certified company. The company started off as an exclusive manufacturer of LPG stoves but gradually forayed into home appliances kitchen wares and electrical items. The product range includes Pressure Cookers, Non-Stick Cookware, Rice Cookers, Table Top Grinder, Mixer Grinder, Hobs, LP Gas Stoves, Kettles, and other small electrical appliances. The company sells its products with the brand name “Greenchef”. At present the company has 25 categories of products in Household and Kitchenware segments and sells its products Pan India by its distribution networks and also exports few products to Sri Lanka. The company also sells its products online on ecommerce sites like Amazon, Flipkart, etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	335.62	238.93
EBITDA	Rs.Crs.	7.64	9.72
PAT	Rs.Crs.	0.51	3.06
Tangible Net Worth	Rs.Crs.	50.25	50.25
Total Debt/TNW	Times	1.31	1.02
Current Ratio	Times	1.57	1.90

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

CARE Ratings has moved the ratings of the bank loan facilities of Rs. 41.90 Crores of 'Greenchef Appliances Limited' to the ‘Issuer Not Cooperating’ category on 27 July 2022, with ratings of “CARE BB; Stable; ISSUER NOT COOPERATING and CARE A4 ; ISSUER NOT COOPERATING”.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	51.93	BWR BB+/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	11Nov2022	BWR B- Stable (Continues to be in ISSUER NOT COOPERATING Category*/Reaffirmed)	10Jun2021	BWR B- Stable (Downgrade/ISSUER NOT COOPERATING*)	26May2020	BWR B Stable (Downgrade/ISSUER NOT COOPERATING*)	NA	NA
Non Fund Based	ST	1.50	BWR A4 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	11Nov2022	BWR A4 (Continues to be in ISSUER NOT COOPERATING Category*/Reaffirmed)	10Jun2021	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)	26May2020	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)	NA	NA
Grand Total		53.43	(Rupees Fifty Three Crores and Forty Three 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
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

Greenchef Appliances Limited

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	Term Loan - Sanctioned	15.00	_	15.00
2	Canara Bank	Cash Credit - Sanctioned	31.00	_	31.00
3	Canara Bank	Bank Guarantee - Sanctioned	_	0.50	0.50
4	Canara Bank	Letter of Credit - Sanctioned	_	1.00	1.00
5	Canara Bank	GECL - Out-standing	2.46	_	2.46
6	Canara Bank	GECL 2.0 - Sanctioned	3.47	_	3.47
Total			51.93	1.50	53.43
TOTAL (Rupees Fifty Three Crores and Forty Three lakhs Only)

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