Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 1221.91 Crs. of Birla Tyres Ltd.
ParticularsFacilities** | 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) |
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 DRIVERSCredit Strengths:
BTL is a part of the renowned BK Birla Group of companies. BK Birla Group has a pre-eminent position in the Indian industry for more than 100 years.
Credit Risks:
BTL has been reporting losses since FY 2019. In FY20 and 21 it reported more than Rs.100 Crs of EBITDA Loss in the business. The losses in tyre manufacturing business were primarily due to non availability of working capital funds resulting in lower production as well as lower sales volume. The company also has a huge debt burden as on date, which was transferred to its books in March 2021 as a result of the scheme of demerger between Kesoram Industries Ltd and BTL approved by the H’ble NCLT, Kolkata in November 2019, with segregation of bank accounts having taken place in March, 2021. The net worth of the company has been fully eroded since FY20 (TNW : FY20 Rs. -283.07 Crs and FY21 Rs. -566.85 Crs)
Due to weak financial performance and continuous losses, BTL has defaulted in their debt repayment - the company has been classified as NPA as on date with the lenders.
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 ENTITYKesoram 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. | Not Available | Not Available |
Total Debt/Tangible Net Worth | Times | Not Available | Not Available |
Current Ratio | Times | 0.09 | 0.24 |
Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 1072.85 |
BWR D
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 149.06 |
BWR D
(Assignment) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 1221.91 | (Rupees One Thousand Two Hundred Twenty One Crores and Ninety One lakhs Only) |
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 |
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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