Uniglobal Papers Pvt Ltd

Brickwork Ratings removes from Issuer Not Cooperating category and revises the ratings for the Bank Loan Facilities aggregating Rs. 23.50 Crs. of Uniglobal Papers Pvt Ltd (or the “Company”).

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (19 Feb 2021)	Present
Fund Based	20.00	20.00	Long Term	BWR BB/Stable Downgrade/ISSUER NOT COOPERATING*	BWR BB + /Stable Upgrade
Non Fund Based	3.50	3.50	Short Term	BWR A4 Downgrade/ISSUER NOT COOPERATING*	BWR A4 + Upgrade
Non Fund Based	(2.75)	(2.75)	Short Term	BWR A4 Downgrade/ISSUER NOT COOPERATING*	BWR A4 + Upgrade
Grand Total	23.50	23.50	(Rupees Twenty Three 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

For arriving at the present ratings, BWR has taken into account the audited financial statements of the company for FY19, FY20 and FY.21, projections for FY22 and FY23, publicly available information, as well as information provided by the company’s management and their bankers.

On review of the performance of Uniglobal Paper Pvt. Ltd (UPPL or the company) Brickwork Ratings has upgraded the rating of their long term bank loan facilities of Rs.20.00 crores from BWR BB, Stable to BWR BB+, with a Stable Outlook, and the rating of their short term bank loan facilities of Rs 3.50 crores from BWR A4 to BWR A4+ (aggregate rated amount Rs 23.50 crores), while simultaneously removing the ratings from the Issuer Not cooperating category.

The upgradation of the ratings of Uniglobal Papers Pvt. Ltd. (UPPL or the company) factors in the extensive experience of its promoters, its comfortable debt protection metrics & liquidity position and Improvement in Profit margins. The ratings are, however, constrained by the moderate scale of operations, geographical concentration risks of operating in only one state, the working capital intensive nature of business with the average utilization of working capital limits standing at around 98% in the last 7 Months ending September 2021 and high competition from other established players in the market.

Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.

COVID IMPACT: The company’s operations have been impacted due to nationwide lockdown announced in March 2020. The company resumed operations gradually in June 2020 and thereafter increased the level of operations in a phased manner. The company did not avail moratorium for interest expense of working capital limits. However the company has availed CECL and GECL as per RBI scheme.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of promoters :

The company has been in existence since 2003 and the promoters have business experience of more than two decades, which is expected to support the business profile of the company over the medium term.
Comfortable debt protection metrics & liquidity position :
Debt protection metrics were comfortable, marked by interest coverage and net cash accrual to total debt ratios of 2.28x and 0.15x, respectively, for FY21. DSCR of the company stand at 1.27 in FY21 indicating the company’s adequacy to meet its debt obligations. Adequate liquidity with modest debt funded capex plans and low debt repayments against the internal cash accruals of Rs.4 - 6 Crs aid the credit risk profile of the company. The current ratio of 1.24x in FY21 indicates adequate liquidity position. The gearing ratio however deteriorated to 1.02x in FY21 from 0.99x in FY20 due to an increase in total debt to Rs. 35.83 Crs. in FY21 from Rs. 33.47 Crs in FY20.
Improvement in Profit margins :
Despite of reduction in the topline of the firm in FY21, the profit margins as indicated by Operating Profit Margin & Net Profit Margin improved and stood at 11.88% and 2.51% in FY21 from 9.11% and 1.29% in FY20 respectively, due to decline in operating costs.

Credit Risks:

Moderate Scale of Operations :
The scale of operations remains low as the company’s business is largely concentrated in Kolkata, West Bengal. The company`s revenue from operations has declined by 7.8% to Rs. 81.72 Crs in FY 21 as compared to Rs. 88.63 Cr. in FY20 due to disruption in operations on account of Nationwide lock down. The company was completely shut down for almost 3 months till June 2020 and from June 2020 to August 2020 it was working with 50% capacity, the operations were normalised from September 2020. The company has achieved ~Rs. 50 Crs of revenue in 6MFY22.
Concentration Risks :
The company is exposed to customer concentration risks as more than 70% of the annual sales are derived from top five customers during FY21, with the top customer contributing more than 33% to its revenues. Further, it also faces supplier concentration risk as nearly 80% of its purchases are from the top 5 sellers, with the largest of them accounting for more than 30% of the purchases. It is also exposed to geographical concentration risk as the business operations are confined to Kolkata, West Bengal.
Working capital intensive :
The operation of the company is highly working capital intensive in nature which resulted in an elongated conversion cycle. The Net working capital cycle increased to 142 days in FY21 from 116 days in FY20 due to increase in inventory days to 121 days from 97 days as the company has to maintain stock of raw material to avoid operational breakdown due to its shortage. The debtor's days increased to 43 days in FY21 from 36 days in FY20.
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.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below

RATING SENSITIVITIES

Upward: Substantial improvements in gearing and debt coverage ratios with improvement in revenues and profit margins would support upward rating action.

Downward: Delays in debt servicing, decline in revenues, operating margins, gearing ratios, debt coverage indicators and overall liquidity in the company would attract downward rating action.

LIQUIDITY INDICATORS - Adequate

The current ratio was adequate at 1.24 times as on 31st March 2021 although, the company's average working limit utilisation for the last 7 months ended September 2021 stood at around 98% in Indian Bank. The company has debt repayment obligations of Rs.3.24 Crs as against cash accruals of Rs.5.95 Crs, as on 31 Mar 2021, which gives a comfortable liquidity position of the company, in FY22 it is expected to increase with the increase in overall operations and Profit. Moreover, the entity has not applied for moratorium of repayment of interest on working capital facilities for the months of March, 2020 to August 2020 which could be availed under the terms of recent RBI circular. The company however availed COVID Emergency Credit Line funding and Emergency Credit Line aggregating Rs. 5.84 crs to meet liquidity mismatches.

ABOUT THE ENTITY

Uniglobal Papers Pvt Ltd(UPPL) was incorporated on 16 September 2003, initially registered in the name of “Agro industries Limited”. Subsequently the name was changed to “Uniglobal Papers Pvt Ltd”. The directors of the company are Mr. Rahul Tikmani and Mr. Yashvardhan Mukim. The Company is now running an industrial Unit for production of Coated Duplex Board at Jhargram, West Bengal. The Installed capacity is 36000 TPA and utilization capacity is 83%.The Company sells its products only through its distributors.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	81.72	88.63
EBITDA	Rs.Crs.	9.71	8.07
PAT	Rs.Crs.	2.06	1.14
Tangible Net Worth	Rs.Crs.	35.03	33.76
Total Debt/Tangible Net Worth	Times	1.02	0.99
Current Ratio	Times	1.24	1.24

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

NIL

ANY OTHER INFORMATION

Nil

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	20.00	BWR BB+/Stable (Upgrade)	19Feb2021	BWR BBStable (Downgrade/ISSUER NOT COOPERATING*)	03Feb2020	BWR BB+Stable (Upgrade)	01Dec2019	BWR BBStable (RatingsNotReviewed)	13Dec2018	BWR BBStable (Reaffirmation)
Non Fund Based	ST	3.50	BWR A4+ (Upgrade)	19Feb2021	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	03Feb2020	BWR A4+ (Upgrade)	01Dec2019	BWR A4 (RatingsNotReviewed)	13Dec2018	BWR A4 (Reaffirmation)
NFB SubLimit	ST	(2.75)	BWR A4+ (Upgrade)	NA	NA	NA	NA	NA	NA	NA	NA
Grand Total		23.50	(Rupees Twenty Three 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
Mrinal Kanti Sarkar Ratings Analyst mrinal.s@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Uniglobal Papers Pvt 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	Indian Bank	Cash Credit - Sanctioned	20.00	_	20.00
2	Indian Bank	Letter of Credit - Sanctioned	_	3.50	3.50
Total			20.00	3.50	23.50
TOTAL (Rupees Twenty Three Crores and Fifty lakhs Only)

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