Shivaganga Polymers Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.12.00 Crs. of Shivaganga Polymers Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Proposed	07.00 05.00	Long Term	BWR BB (Stable)
Sub Total	12.00
Grand Total	12.00	(Rupees Twelve Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes that Shivaganga Polymers Pvt. 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 DRIVERS

Credit Strengths:

• Locational Advantage :

  The company/Firm is located in Hyderabad cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge and vendors making the company more efficient and cost effective.

• Company’s Existence :

  The company is in existence for 22 years and has seen complete business cycles.

• Networth :

  Net worth of the company is increasing Y-O-Y due to retention of profits.

• Management Experience :

  Senior Directors of the company Mr. P.V Ramana Reddy and Mr. Anil Kumar Reddy is having more than three decades of Experience. Company is run by the qualified and experienced directors.

• Good Customer Base :

  The company is having reputed customers like Reliance Infocom Limited,Tata Projects Ltd.,NTPC Limited,Municipal Engineering departments, Govt. of Telangana and Andhra Pradesh. Therefore company is having good future prospect.

Credit Risks:

• Competition in the Industry :

  Entry barriers in the industry are low on account of limited capital and technology requirement and also low differentiation in the end product leading to intense competition and limiting the pricing power resulting in low profitability.

• Reduced Revenue :

  The fall in revenue in 2020 is because of the completion of old project, lowered down in the input price and because of economy slowdown.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the company to sustain the growth in the scale of operations, improve profitability margins, ease gearing levels by additional capital infusion, maintain the comfortable level of coverage indicators, and improving the liquidity position will be the key rating sensitivities.  

Positive: Any substantial jump in revenue from operations, profitability margins, improvement in financial risk and liquidity profile.

Negative: Any steep decline in the revenue from operations, profitability margins, deterioration in financial risk and liquidity profile.

LIQUIDITY POSITION

Net Cash accruals are Rs.0.21 Crs in FY19 against Rs. 0.26 Crs in FY18 and the Company has stretched liquidity to cover the long term debt obligations in the near term.Average Working capital utilization was above 80% of the sanctioned limit in the last six months ending on 31st May 2020. The Moderate Current Ratio marked by 1.70 in FY19 against Rs. 1.41 Crs in FY18.BWR believes that liquidity will remain stretched in the short to medium term.

PROFILE

M/S.SHIVAGANGA POLYMERS PVT LTD was Incorporated in 25thMarch 1998 with an objective of Manufacture and supply of High Density polyethylene Pipes by its promoter Mr. P.V. Ramana Reddy. Its registered office is situated in Kukatpally, Hyderabad. Its product is HDPE PIPES for potable Water Supply as per IS:4984:2016 with ISI Mark. The product range starts from 20mm to 400mm with pressure rating up to PN 16 (16Kg/cm2).

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	68.48	79.03
EBITDA	Rs.Crs.	5.11	6.03
PAT	Rs.Crs.	1.75	2.91
Tangible Net Worth	Rs.Crs.	9.44	7.70
Total Debt/Tangible Net Worth	Times	1.36	1.98
Current Ratio	Times	1.70	1.41

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned Term Loan - Proposed	Long Term	07.00 05.00	BWR BB (Stable)	NA	NA	NA
Total			12.00	(Rupees Twelve Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Rasmita Mishra Ratings Analyst B : +91 023310161 rasmita.m@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
K Nagaraj Associate Director - Ratings B : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	7.00	_	7.00
2	Term Loan - Proposed	5.00	_	5.00
Total				12.00
TOTAL (Rupees Twelve Crores Only)