RATING RATIONALE
09Sep2021

Birla Tyres Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 1221.91 Crs. of Birla Tyres Ltd.

Particulars
Facilities** Amount(Rs.Crs.) Tenure Rating#
Fund Based 1072.85 Long Term BWR D
Assignment
Non Fund Based 149.06 Short Term BWR D
Assignment
Grand Total 1221.91 (Rupees One Thousand Two Hundred Twenty One Crores and Ninety One 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
Note: Total Working Capital limit of Rs.537 Crores (including both fund and non-fund based ) is based on the last underlying Working Capital Jt Documentation executed between the Working Capital consortium banks and Kesoram Industries Ltd. (pre-demerger) for Rs.1495 Crores and the same was bifurcated based on the scheme of arrangement approved by NCLT order passed on 8th Nov 2019 and the Revival Letter dated 19th Dec 2020.
RATING ACTION / OUTLOOK

Brickwork Ratings has essentially relied upon the Audited financials of Birla Tyres Ltd. upto FY2021 and other information as available in the public domain, as well as information / clarifications provided by the Company and its bankers, to arrive at the present ratings.

Brickwork Ratings has assigned the ratings of BWR D to the long term bank loan facilities of Rs. 1072.85 Crores and short term bank loan facilities of Rs. 149.06 Crores (aggregating Rs. 1221.91 Crores, outstanding as in Dec 2020) of Birla Tyres Ltd. .The ratings have factored in the latest feedback from its bankers advising that the account of BTL with them is currently a Non Performing Asset, as well as the Declaration of Default filed by the company in the Stock Exchanges on 6th March, 2020. Also, the company has confirmed that BTL is in default with all of their lenders as on date.

KEY RATING DRIVERS


Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

Analytical Approach:  Analysis on Standalone Financials

RATING SENSITIVITIES

Positive: Timely Debt Servicing for the curing period of 90 days, could result in reassessment of the credit profile of the company.

LIQUIDITY INDICATORS - Poor

The company's liquidity remains poor, as reflected from it’s loan servicing history, and the limited prospects of improvement in its topline. The company has been classified as NPA with all of it’s lenders.

ABOUT THE ENTITY

Kesoram Industries Ltd (KIL) the flagship company of BK Birla Group was previously engaged in the business of cement and tyre manufacturing since 1919.,

KIL’s tyre manufacturing facility, which is located in Balasore, Odisha, and whose tyres are sold under the brand name of ‘Birla Tyres’, has been spun off into a separate company Birla Tyres Limited. The scheme of the demerger between KIL and Birla Tyres Limited (BTL) and their respective shareholders and creditors was approved by the Hon’ble NCLT on 8th November 2019 and on filing of the scheme with the Registrar of Companies, the scheme became effective on 4 December 2019. Pursuant to the scheme becoming effective, the Tyre business undertaking is demerged from the company and transferred to and vested in the Birla tyres Limited wef 1 January 2019 . Segregation of the bank accounts between BTL and KIl has also been completed as on date.

Birla tyres have a wide range of tyres from motorcycles to farm tractors. The company produces truck & bus tyres, passenger car tyres 2 and 3 wheeler tyres, farm and mining tyres etc., and it manufactures bias and radial tyres with over 170 sales depots, 2,329 active dealers at major locations in India and in the international network across 17 countries worldwide. The registered office of the company is situated at Kolkata and the plant is situated at Balasore, Orissa.The company is a listed company in BSE and NSE with 53.13% shares held by the Promoter and Promoter group, and the rest are held by the public. Present installed capacity is 16.1 Million nos of tyres per annum.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 137.36 471.70
EBITDA Rs.Crs. -107.72 -161.04
PAT Rs.Crs. -287.63 -286.67
Tangible Net Worth Rs.Crs. 0.00 0.00
Total Debt/Tangible Net Worth Times 0.00 0.00
Current Ratio Times 0.09 0.24

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 1072.85
BWR D
(Assignment)
NA
NA
NA
NA
NA
NA
NA
NA
Non Fund Based ST 149.06
BWR D
(Assignment)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 1221.91 (Rupees One Thousand Two Hundred Twenty One Crores and Ninety One 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.

Analytical Contacts

Soumantak Bagchi

Senior Rating Analyst soumantak.b@brickworkratings.com

Anuradha Gupta

Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Birla Tyres 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 Axis Bank Ltd. Term LoanSanctioned 435.38 _ 435.38
2 Axis Bank Ltd. Cash CreditSanctioned 8.98 _ 8.98
3 Axis Bank Ltd. Letter of CreditSanctioned _ 1.80 1.80
4 DBS Bank India Limited Term LoanSanctioned 32.33 _ 32.33
5 DBS Bank India Limited Cash CreditSanctioned 35.92 _ 35.92
6 HDFC Bank Cash CreditSanctioned 46.70 _ 46.70
7 HDFC Bank Letter of CreditSanctioned _ 5.38 5.38
8 ICICI Bank Letter of CreditSanctioned _ 26.93 26.93
9 ICICI Bank Cash CreditSanctioned 17.96 _ 17.96
10 IndusInd Bank Cash CreditSanctioned 35.92 _ 35.92
11 Karur Vysya Bank Term LoanSanctioned 34.20 _ 34.20
12 Kotak Mahindra Bank Cash CreditSanctioned 14.73 _ 14.73
13 Punjab National Bank Cash CreditSanctioned 21.55 _ 21.55
14 Punjab National Bank Letter of CreditSanctioned _ 10.78 10.78
15 South Indian Bank Cash CreditSanctioned 17.96 _ 17.96
16 South Indian Bank Term LoanSanctioned 136.08 _ 136.08
17 State Bank Of India (SBI) Cash CreditSanctioned 170.26 _ 170.26
18 State Bank Of India (SBI) Letter of CreditSanctioned _ 86.21 86.21
19 State Bank Of India (SBI) Bank GuaranteeSanctioned _ 17.96 17.96
20 West Bengal Infrastructure Development Finance Corporation Limited Term LoanSanctioned 46.92 _ 46.92
21 Yes Bank Cash CreditSanctioned 17.96 _ 17.96
Total 1072.85 149.06 1221.91
TOTAL (Rupees One Thousand Two Hundred Twenty One Crores and Ninety One lakhs Only)
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