RATING RATIONALE
11Aug2021

Innovative Tyres & Tubes Ltd.

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 35.50 Crs. of Innovative Tyres & Tubes Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(29 Oct 2020)
Present
Fund Based 20.50 20.50 Long Term BWR B- /INC
Downgrade
BWR D
Downgrade/ISSUER NOT COOPERATING*
Non Fund Based 15.00 15.00 Short Term BWR A4/INC
Reaffirmation
BWR D
Downgrade/ISSUER NOT COOPERATING*
Grand Total 35.50 35.50 (Rupees Thirty Five Crores and Fifty 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

BWR has downgraded the ratings on the bank facilities of Innovative Tyres and Tubes Ltd (ITTL) to ‘BWR D’ from ‘BWR B-/A4 INC’.

The downgrade reflects the delay in servicing of debt in the month of June 2021 (As per the information in public domain). The obligation remains overdue as on July 29, 2021. The irregularity is driven by poor liquidity with disruption in sales and cash inflows amidst resurgence of COVID 19, disruption in shipping lines.

ITTL has working capital intensive operations, low margin and weak debt protection measures, and is exposed to intense competition in the tyre industry and volatility in raw material prices. However ITTL benefits from extensive promoter experience and moderate capital structure.

KEY RATING DRIVERS

ABOUT THE ENTITY

Innovative Tyres & Tubes Ltd, part of the Innovative Group, was incorporated in 1995 as a manufacturer of Butyl Rubber Tubes for four-wheelers like Car, LCV, Truck, Bus, etc. and soon expanded to tubes tyres and flaps for commercial vehicles, agricultural vehicles and trucks. It has two plants - one spread 110,000 sq ft manufacturing tubes and another manufacturing tyres spread over 3,00,000 sq. ft. located at Halol, Gujarat in India in the industrial friendly state of Gujarat with good base infrastructure and access to all key market areas. The company markets the products under its three brands: ‘Innovative’, ‘Vayu’ and ‘Stud’ with exports of tyres under the ‘Vayu’ and ‘Stud’ brand supplied through Tionale Enterprises, Singapore and caters to the domestic market through network of exclusive/multi product outlets. Its products carry the quality certificate of ISO 9001:2008, ISI, TUV & BIS.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 139.17 148.86
EBITDA Rs.Crs. 2.12 0.13
PAT Rs.Crs. -8.84 -9.83
Tangible Net Worth Rs.Crs. 67.65 76.49
Total Debt/Tangible Net Worth Times 0.30 0.27
Current Ratio Times 1.15 1.15

RATING HISTORY FOR THE PREVIOUS 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 20.50
BWR D
(Downgrade/ISSUER NOT COOPERATING*)
NA
NA
29Oct2020
BWR B-/INC
(Downgrade)
NA
NA
19Feb2018
BWR B/INC
(Reaffirmation)
Non Fund Based ST 15.00
BWR D
(Downgrade/ISSUER NOT COOPERATING*)
NA
NA
29Oct2020
BWR A4/INC
(Reaffirmation)
NA
NA
19Feb2018
BWR A4/INC
(Reaffirmation)
Grand Total 35.50 (Rupees Thirty Five Crores and Fifty 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

Parth Modi

Junior Rating Analyst parth.m@brickworkratings.com

Dileep Narayan Singh

Director dileep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Innovative Tyres & Tubes 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 State Bank Of India (SBI) Cash CreditOut-standing 15.00 _ 15.00
2 State Bank Of India (SBI) Term LoanOut-standing 2.50 _ 2.50
3 State Bank Of India (SBI) Standby Line of CreditOut-standing 3.00 _ 3.00
4 State Bank Of India (SBI) Letter of CreditSanctioned _ 14.00 14.00
5 State Bank Of India (SBI) Bank GuaranteeSanctioned _ 1.00 1.00
Total 20.50 15.00 35.50
TOTAL (Rupees Thirty Five Crores and Fifty lakhs Only)
Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.