Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Khaitan Winding Wire Pvt. Ltd. for an enhanced aggregate amount of Rs. 52.36 Crs.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (10 Feb 2021) |
Present | ||
Fund Based | 29.00 | 41.36 | Long Term |
BWR BBB- /Stable
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
Non Fund Based | 9.00 | 11.00 | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
Grand Total | 38.00 | 52.36 | (Rupees Fifty Two Crores and Thirty Six lakhs Only) |
BWR has reaffirmed the ratings for the long term bank loan facilities of Khaitan Winding Wire Pvt. Ltd. for Rs.41.36 Crs.(enhanced from Rs.29.00 crs) at BWR BBB-/ Stable and also the ratings for their short term bank loan facilities for Rs.11.00 Crs (enhanced from Rs.9.00 Crs) at BWR A3, (aggregate rated amount enhanced to Rs.52.36 Crs from Rs. 38.00 Crs). The reaffirmation in the rating factors in the experienced management, favourable financial parameters and diversified client base. However, the ratings are constrained by the Low profitability, with susceptibility to raw material price fluctuations, supplier concentration risk, as well as the Competitive and fragmented nature of the wire industry. The outlook has been retained at Stable as BWR believes that the business risk profile of the Company will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. The rating outlook may be revised to Positive in case of significant improvement in its topline and its credit metrics, or to Negative if there is any substantial decrease in the operating income or deterioration in the financial parameters and delay in debt servicing.
For arriving at the ratings, Brickwork Ratings has relied upon the Audited Financial statements of FY21, key financial figures 9MFY22, projections for FY22 and FY23, as well as information / clarifications provided by the company and its bankers.
KEY RATING DRIVERS
Credit Strengths:
Experienced management: The three decade long experience of the promoters and their in-depth understanding of business dynamics will continue to support the business risk profile of the company. The company has an established operational track record since it has been operating for 30 years. The Company has consolidated its presence over time, establishing its brand by the name ‘KWW’.
The financial performance of the company in FY 21 stood favourable, marked by tangible net worth of Rs. 30.05 Crores (FY20: Rs.28.68), ISCR at 2.47 times (FY20: 2.00 times), total debt to tangible net worth at 1.03 times (FY20: 0.68 times), and current ratio at 1.59 times (FY20: 1.71 times). The topline of the company has also grown from Rs.122.36 Crs in FY20 to Rs.129.13 Crs in FY21. However, this growth is more price driven, rather than by growth in volumes.
The company has a wide customer base, spread across various cities in India and Bangladesh, catering to clients across diversified industries including electronics, automobiles, consumer durables and capital goods.
Operating margin and PAT margin of the company have remained low in the last two financial years due to stiff competition in the industry. The company has reported operating profit margin of 3.64% (FY20: 3.89%) and PAT margin of 1.06% (FY20: 1.04%). Furthermore, the Company continues to be exposed to volatility in the raw material prices. Copper and Aluminum are the key raw materials consumed by the company, the movement in the prices of which is dependent on various factors. However, the company manages to offset raw material price fluctuation risk by passing on the price escalation to its customers since it enjoys a competitive edge and has a good brand recall.
The company faces supplier concentration risk as a significant part of purchases are made from Vedanta Limited. However, considering the long term relationship with the said supplier as well as the stature and standing of Vedanta Limited, the risk is minimal.
The Indian wire industry is highly fragmented with a large number of wire producers and numerous unorganized players could pressure the profit margins. However, with over three decades of industry presence, the company has proven product quality standards and long term relations with its clients, which, to an extent, give the company a competitive edge.
Standalone
RATING SENSITIVITIES
Positive triggers – The ratings could be upgraded if the company demonstrates a sustained improvement in its revenues, operating profit margin, while maintaining healthy coverage metrics.
Negative triggers – The downward pressure on rating could arise in case of a material decline in the revenues and profitability of the company leading to adverse impact on the debt coverage metrics.
LIQUIDITY INDICATORS - Adequate
Liquidity is adequate, as characterized by EBITDA of Rs.4.70 Crs.in FY21 (Rs.4.76 Crs for FY20) which was sufficient to cover the interest and finance charges of Rs.1.90 Crs (Rs.2.38 Crs for FY20). Net cash accruals was Rs.2.73 Crs for FY21 as against Net cash accruals of Rs.2.70 Crs in FY20. Current ratio was 1.59 times in FY21 (FY20: 1.71 times). ISCR was 2.47 times in FY21 as compared to ISCR of 2.00 times in FY20. The average utilization of WC limits from SBI and BOI in the past 6 months is at around 70% and 85% respectively as confirmed by the bankers. The company has also availed GECL aggregating to Rs.7.86 Crs from its lenders to meet its operational liabilities. Future cash accruals are expected to be sufficient to cover the debt obligations arising out of these loans.
ABOUT THE ENTITYKhaitan Winding Wire Private Limited (KWWPL) was incorporated on 22/2/1989 with its registered office at P-38, India Exchange Place, Kolkata. It is into the manufacture of enamelled winding wire made of copper. In 2014-15, the company established a new aluminium plant and diversified into manufacturing of aluminium wires.T he manufacturing plant is located in Jalan Complex, Argori, Howrah (West Bengal). The Company was promoted by Sri Ajit Kumar Khaitan and Sri Pradeep Kumar Khaitan
KEY FINANCIAL INDICATORS (Standalone)
Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 129.13 | 122.36 |
EBITDA | Rs.Crs. | 4.70 | 4.76 |
PAT | Rs.Crs. | 1.37 | 1.27 |
Tangible Net Worth | Rs.Crs. | 30.05 | 28.68 |
Total Debt/Tangible Net Worth | Times | 1.03 | 0.68 |
Current Ratio | Times | 1.59 | 1.71 |
Usual covenants for bank loan facilities.
ACUITE has moved the rating of KWWPL to “Issuer Not Cooperating’’ category with a rating of ACUITE BB/A4+ on 8/10/20, due to non submission of information.
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 41.36 |
BWR BBB-/Stable
(Reaffirmation) |
10Feb2021 |
BWR BBB- Stable
(Reaffirmation) |
NA |
NA
|
19Dec2019 |
BWR BBB- Stable
(Reaffirmation) |
Non Fund Based | ST | 11.00 |
BWR A3
(Reaffirmation) |
10Feb2021 |
BWR A3
(Reaffirmation) |
NA |
NA
|
19Dec2019 |
BWR A3
(Reaffirmation) |
Grand Total | 52.36 | (Rupees Fifty Two Crores and Thirty Six 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 | |
---|---|
Ambar Kumar Chauhan Ratings Analyst ambarkumar.c@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 | Standard Chartered Bank | Term LoanSanctioned | 2.50 | _ | 2.50 | |
2 | Standard Chartered Bank | Cash CreditSanctioned | 8.50 | _ | 8.50 | |
3 | Standard Chartered Bank | Bank GuaranteeSanctioned | _ | 6.00 | 6.00 | |
4 | Standard Chartered Bank | Letter of CreditSanctioned | _ | 5.00 | 5.00 | |
5 | Standard Chartered Bank | Covid -19 Emergency Line CreditSanctioned | 1.70 | _ | 1.70 | |
6 | Standard Chartered Bank | GECLSanctioned | 0.85 | _ | 0.85 | |
7 | State Bank Of India (SBI) | GECLSanctioned | 2.11 | _ | 2.11 | |
8 | State Bank Of India (SBI) | GECLSanctioned | 3.20 | _ | 3.20 | |
9 | State Bank Of India (SBI) | Letter of CreditSanctioned | _ | _ | 0.00 | |
10 | State Bank Of India (SBI) | Cash CreditSanctioned | 22.50 | _ | 22.50 | |
Total | 41.36 | 11.00 | 52.36 | |||
TOTAL (Rupees Fifty Two Crores and Thirty Six lakhs Only) |
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About Brickwork RatingsBrickwork 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.
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