Brickwork Ratings upgrades the long term rating and reaffirm the short term ratings for the Bank Loan Facilities of Rs. 61.00 Crs. of Jaybee Laminations Pvt. Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (21 Dec 2021) |
Present | ||
Fund Based | 20.00 | 20.00 | Long Term |
BWR BB /Stable
Downgrade/ISSUER NOT COOPERATING* |
BWR BB +
/Stable Upgrade |
(4.00) | (16.36) | Short Term |
BWR A4+
Downgrade/ISSUER NOT COOPERATING* |
BWR A4 +
Reaffirmation |
|
Non Fund Based | 20.00 | 41.00 | Short Term |
BWR A4+
Downgrade/ISSUER NOT COOPERATING* |
BWR A4 +
Reaffirmation |
(20.00) | (10.00) | ||||
Grand Total | 40.00 | 61.00 | (Rupees Sixty One Crores Only) |
Brickwork Ratings has upgraded the long term rating and reaffirmed the short term rating for the bank facilities availed by Jaybee Laminations Pvt. Ltd. (JLPL, or ‘the company’). The upgrade in the long-term rating takes into account healthy scale-up of operations with improved profitability margins and a comfortable overall solvency profile in FY22 (Prov.). The ratings further derive strength from the experienced management team and established relationships with the customers & suppliers. The ratings are, however, constrained by the susceptibility of the margins to any adverse fluctuations in the raw material prices and forex rates and stiff competition due to the fragmented nature of industry.
OUTLOOK: STABLE
BWR believes that the business and financial risk profile of JLPL will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. The outlook may be revised to 'Positive' in case revenue and profitability show a sustained improvement leading to an improved financial and liquidity profile. The rating outlook may be revised to 'Negative' in case the profitability generated declined, there are aggressive debt-funded capex plans, or there is a significant deterioration in the overall liquidity profile of the company.
KEY RATING DRIVERS
Credit Strengths:
JLPL is managed by Mr. M.K. Aggarwal and Mr. Mudit Aggarwal. Mr. M.K. Aggarwal has more than three-decade experience in the field of transformers and CRGO Silicon Steel Stamping. Mr. Mudit Aggarwal, graduated from Columbia University with a degree of MS in Engineering Management, is having an experience of 4 years in the same line of business.
The overall gearing of the company stood at a comfortable level of 0.87x, as on March 31, 2022 (Prov.). The same improved from 1.09x, as on March 31, 2021, because of the accretion of profits to the net worth. The interest coverage ratio of the company also stood at a comfortable level of 3.32x in FY22. The same stood at 1.14x in FY20 and 0.88x in FY21. In FY21, due to the adverse business environment, the operational & financial requirements of the company were met by fund infusion by the promoters (amounting to Rs.2.36 Cr.) in the form of unsecured loan.
The operating income of the company increased at a healthy rate of 88%, from Rs.75.03 Crs in FY21 to Rs.141.43 Crs in FY22 (Prov.). Though the income declined by 43% in FY21 (on a year-on-year basis), because of the disruption in operations owing to the Covid-19 pandemic, it recovered in FY22, on the back of better demand. The operating profit margins of the company also saw a significant improvement in FY22 to 8.94% (from 2.99% in FY21 and 3.85% in FY20), on the back of favorable raw material procurement prices. The same also resulted in improvement in the PAT margins to 4.17% in FY22 [from 0.05% in FY20 and (-) 1.71% in FY21].
JLPL’s margins are primarily affected by fluctuations in CRGO steel prices, which is the major raw material of the company. Further, since a major part of the raw material requirement is met through imports, the company is exposed to the adverse fluctuations in the foreign currency exchange rates.
The transformer lamination, cores and coils manufacturing industry is highly fragmented because of the presence of various organized, unorganized & international players, leading to intense competition. This results in the competitive nature of the industry with limited ability with the players to pass on the increased costs to the customers.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Positive: The rating may be positively revised if if there is a significant & sustainable improvement in the scale of operations, profitability margins, and the solvency & liquidity profiles continue to remain satisfactory.
Negative: The rating would be adversely affected if the revenue & profitability decline considerably or there is a deterioration in the solvency & liquidity profile of the company.
LIQUIDITY INDICATORS - Adequate
The Current ratio of the company stood at a satisfactory level of 1.48 times, as on March 31, 2022 (Prov.). The debt protection metrics also stood comfortable with ISCR of 3.32x in FY22 (Prov.). The company had a debt repayment obligation of Rs. 1.05 Cr. in FY22, which was met through internal accruals. It has a repayment obligation of Rs.1.90 Cr. in FY23 which is also expected to be met through the cash accruals. Average utilization of working capital limits stood at ~87% for the 12 month period till May-22. The cash and cash equivalents stood at Rs.0.03 Crs as on March 31, 2022 (Prov.).
ABOUT THE ENTITYJaybee Laminations Pvt Ltd was incorporated in 1988 as a private limited company having its registered office at East Patel Nagar, New Delhi. The company is engaged in the manufacturing of cold rolled grain oriented (CRGO) silicon steel products which are used in distribution and power transformers. It has two manufacturing units located in Noida (UP) with an installed capacity of 16800 MTPA. The company is managed by its directors Mr. M.K. Aggarwal and Mr. Mudit Aggarwal.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 21-22 (Provisional) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 141.43 | 75.03 |
EBITDA | Rs.Crs. | 12.64 | 2.25 |
PAT | Rs.Crs. | 5.90 | -1.28 |
Tangible Net Worth | Rs.Crs. | 30.74 | 24.85 |
Total Debt/TNW | Times | 0.87 | 1.09 |
Current Ratio | Times | 1.48 | 1.97 |
NA
Acuite has migrated the rating under INC (for the Rs.57.11 Cr. facility) vide Press Release dated November 05, 2021.
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 | 20.00 |
BWR BB+/Stable
(Upgrade) |
21Dec2021 |
BWR BB Stable
(Downgrade/ISSUER NOT COOPERATING*) |
13Nov2020 |
BWR BB+ Stable
(Assignment) |
19Jul2019 |
BWR BB Stable
(Downgrade/Withdrawal) |
FB SubLimit | ST | (16.36) |
BWR A4+
(Reaffirmation) |
21Dec2021 |
BWR A4+
(Downgrade/ISSUER NOT COOPERATING*) |
NA |
NA
|
NA |
NA
|
Non Fund Based | ST | 41.00 |
BWR A4+
(Reaffirmation) |
21Dec2021 |
BWR A4+
(Downgrade/ISSUER NOT COOPERATING*) |
13Nov2020 |
BWR A4+
(Assignment) |
19Jul2019 |
BWR A4
(Downgrade/Withdrawal) |
NFB SubLimit | ST | (10.00) |
BWR A4+
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
Grand Total | 61.00 | (Rupees Sixty One Crores 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.
Hyperlink/Reference to applicable CriteriaAnalytical Contacts | |
---|---|
Aditya Singh Ratings Analyst adityasingh@brickworkratings.com |
Sudeep Sanwal Associate Director - Ratings sudeep.s@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 | Canara Bank | Overdraft against Book Debts (ODBD)Sanctioned | 20.00 | _ | 20.00 | |
2 | Canara Bank | Letter of CreditSanctioned | _ | 6.00 | 6.00 | |
3 | Canara Bank | ILC/FLC/BGSanctioned | _ | 35.00 | 35.00 | |
Total | 20.00 | 41.00 | 61.00 | |||
TOTAL (Rupees Sixty One Crores Only) |
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 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 11,541 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.