RATING RATIONALE
16Aug2021

Ginni Filaments Ltd.

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 269.17 Crs. of Ginni Filaments Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(18 Sep 2020)
Present
Fund Based 223.50 207.00 Long Term BWR BBB (Stable)
#Upgrade
BWR BBB + /Stable
Upgrade
Non Fund Based 57.60 62.17 Short Term BWR A3+
#Upgrade
BWR A2
Upgrade
Grand Total 281.10 269.17 (Rupees Two Hundred Sixty Nine Crores and Seventeen 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 has upgraded the long term rating of Ginni Filaments Limited (GFL) to BWR BBB+ from BWR BBB and short term rating to BWR A2 from BWR A3+ for the bank loan facilities of GFL. The rating upgrade is underpinned by GFL’s improving EBITDA margins which in turn are supported by favorable product mix. The upgrade is also driven by improved credit profile of GFL marked by strong cash accruals despite capex and healthy debt protection metrics. The ratings also factor in the long track record of operations and extensive industry experience of the promoters, comfortable gearing ratio and established long term relations with established players, integrated operations and diversified product mix. The rating is, however, constrained by exposure to risks relating to volatility in raw material prices, highly fragmented and competitive nature of industry and foreign exchange fluctuations.

 

The rating outlook is Stable supported by strong demand outlook, and sustainable improvement in margin profile mitigating overall industry risks

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Positive: The rating may be upgraded upon sustained improvement in overall EBITDA leading to deleveraging.

Negative: The rating outlook may be revised downward in case revenues and EBITDA of the company substantially deteriorates from current level. Rating may also be adversely affected in case of adequate deterioration in gearing and coverage ratios.

 

LIQUIDITY INDICATORS - Adequate

Company has Cash Credit facility of Rs. 207 crs (reduced in FY21 from Rs. 219 Cr) and its average utilisation of the fund-based limits ranges from 60% - 70% over the 6 months ended July 2021 of the disbursed limit. Company has cash accruals( profit after tax plus depreciation) of Rs 66.10 Cr in FY21 improved to Rs. 31.60 Crs in FY20 against the CPLTD of Rs. 16.23 Crs paid in FY 21. Company has cash generated from operating activities has improved to Rs. 116.76 Crs in FY21 from Rs. 11.96 Crs in FY20. In order to safeguard the company from any financial loss from the pandemic relating to Covid -19, the company availed the benefit of moratorium provided by RBI for the payment of Term Loan installment and interest payment on Working capital facilities. However, the company has repaid all the installments in the month of July 2020 falling due till July 2020 for Term Loans and Interest on working capital facility was repaid in Aug 2020.

ABOUT THE ENTITY

Ginni Filaments Ltd was incorporated in 1982 by Mr. Rajaram Jaipuria and Mr. Shishir Jaipuria, promoters of the company. The overall business of the company is divided into two categories :- one is traditional business which include yarn, knitted fabric and knitted garment business and second is technical textile business which include non woven fabric and its converted products like wet and dry wipes. Company is now venturing into cosmetic manufacturing activities also. The company derived the majority of revenue (42% of Sales) from sales of cotton yarn, 28% from non-woven fabrics, 5% from garments, 11% from fabrics and rest from wipes and other products (these include cosmetic products for Johnson and Johnson and for Future Group (now taken over by Reliance)). The company is now capable of manufacturing 22,000 MT yarn per annum (67,584 spindles and 1,680 rotors), 3,530 MT knitted fabric per annum (~41 knitting machines), 10,000 MT non-woven fabric per annum, 10.8 million garments per annum (~750 stitching machines), and around 1,600 million pieces of wipes per annum.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 778.42 788.36
EBITDA Rs.Crs. 110.69 59.47
PAT Rs.Crs. 41.30 5.70
Tangible Net Worth Rs.Crs. 238.60 185.44
Total Debt/Tangible Net Worth Times 0.96 1.67
Current Ratio Times 1.15 1.11

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 207.00
BWR BBB+/Stable
(Upgrade)
NA
NA
18Sep2020
BWR BBB (Stable)
(#Upgrade)
30Sep2019
BWR BBB- (Stable)
(#Initial)
NA
NA
Non Fund Based ST 62.17
BWR A2
(Upgrade)
NA
NA
18Sep2020
BWR A3+
(#Upgrade)
30Sep2019
BWR A3
(#Initial)
NA
NA
Grand Total 269.17 (Rupees Two Hundred Sixty Nine Crores and Seventeen 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

Neha Wahi

Ratings Analyst Board : +91 11 2341 2232 nehawahi@brickworkratings.com

Tanu Sharma

Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Ginni Filaments 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 Bank of Baroda Cash CreditSanctioned 56.00 _ 56.00
2 Bank of Baroda Letter of CreditSanctioned _ 13.00 13.00
3 Bank of Baroda Bank GuaranteeSanctioned _ 1.00 1.00
4 Federal Bank Cash CreditSanctioned 21.00 _ 21.00
5 Federal Bank Letter of CreditSanctioned _ 8.60 8.60
6 HDFC Bank Cash CreditSanctioned 20.00 _ 20.00
7 HDFC Bank Letter of CreditSanctioned _ 5.00 5.00
8 State Bank Of India (SBI) Cash CreditSanctioned 110.00 _ 110.00
9 State Bank Of India (SBI) Letter of CreditSanctioned _ 28.00 28.00
10 State Bank Of India (SBI) Bank GuaranteeSanctioned _ 2.00 2.00
11 State Bank Of India (SBI) Forward ContractSanctioned _ 4.57 4.57
12 UCO Bank Cash CreditSanctioned _ _ 0.00
13 UCO Bank Letter of CreditSanctioned _ _ 0.00
Total 207.00 62.17 269.17
TOTAL (Rupees Two Hundred Sixty Nine Crores and Seventeen 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.