RATING RATIONALE
10Nov2022

Hindprakash Chemicals Pvt. Ltd. (erstwhile Hindprakash Tradelink Pvt. Ltd.)

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 168.40 Crs. of Hindprakash Chemicals Pvt. Ltd. (erstwhile Hindprakash Tradelink Pvt. Ltd.)

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(23 Jul 2021)
Present
Fund Based 88.40 127.15 Long Term BWR BBB+/Stable
Reaffirmation
BWR BBB + /Stable
Reaffirmation
(22.00) (22.00) Short Term BWR A2
Upgrade
BWR A2
Reaffirmation
(7.00) (7.00)
(9.00) (0.00)
(5.50) (5.50)
(6.00) (6.00)
(2.50) (2.50)
(3.50) (3.50)
Non Fund Based 40.00 41.25 Short Term BWR A2
Upgrade
BWR A2
Reaffirmation
(4.00) (4.00)
(0.75) (0.75)
Grand Total 128.40 168.40 (Rupees One Hundred Sixty Eight Crores and Forty 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

The company continues to benefit from the established market position in the chemical industry, experienced promoters, location advantage at Kandla Special Economic Zone, comfortable financial risk, and liquidity risk profile. The company also benefits from the funding support of the promoters in the form of unsecured loans. 

The ratings, however, are constrained by the exposure of the company’s profitability to volatility in raw material prices & forex rate, and the company’s presence in a highly competitive and fragmented nature of the chemical industry. The rating also considers the exposure to industry risk related to the requirement of continuous adherence to regulatory compliance to pollution control norms.

Outlook: Stable

The “Stable” outlook reflects BWR’s expectations that HCPL will maintain a stable business and credit profile supported by the company’s established presence in the chemical industry, comfortable financial risk profile, and stable demand outlook.

 

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

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). BWR has principally relied upon the standalone audited financials up to FY22, publicly available information, and clarification/information provided by the Company.

RATING SENSITIVITIES

Going forward the Company’s ability to improve its scale of operations, profitability, and liquidity profile will be the key rating sensitivities.

Positive:

The rating may be upgraded if the company reports significant improvement in operating income and profitability while maintaining a comfortable liquidity position

Negative:

The rating may be downgraded if the company reports a significant decline in operating income and profitability leading to deterioration in debt coverage indicators and the liquidity profile of the Company.
The rating may be downgraded if the company does not complete the ongoing capital expenditure plan within the estimated cost and timeline resulting in deterioration of the company's financial risk and liquidity profile.

LIQUIDITY INDICATORS - Adequate

The company has reported a decline in net cash accruals from Rs.13.01 crores in FY 2021 to Rs. 11.99 crores in FY 2022 and against debt obligations of Rs. 4.60 crores for FY2022. The current ratio stood at 1.19 times as on 31st March 2022. Further, the company’s average working capital limit utilization stood at around 84 percent for the period from April 2022 to September 2022. The company has also applied for a term loan of Rs. 27.50 crores for CAPEX purposes and a cash credit of Rs.7.50 crores and is expected to be sanctioned by end of November 2022. The cash and cash equivalents stood at Rs. 6.08 crores as on 31st March 2022. Further, the company has a repayment obligation (including the proposed loan) of around Rs. 18.71 crores due over the next three years, and the same is expected to be met adequately through internal accruals. Also, the promoters of the company are expected to infuse funds in the form of unsecured loans to meet the ongoing capital expenditure and additional working capital requirements.  

 

ABOUT THE ENTITY

Hindprakash Chemicals Private Limited [Erstwhile Hindprakash Tradelinks Private Limited] (HCPL or “the Company”) was incorporated in 1972 with a registered office in Ahmedabad. The company is engaged in the trading of dyes, intermediates, auxiliaries, chemicals, etc. The company has a pan-India presence and is one of the largest stockists of multi-application dyes and intermediates with the strategic locational advantage of the SEZ warehousing unit at Kandla Special Economic Zone, Gandhidham Gujarat. 

The company has various international connections for procuring and supplying products to some of the big international players. HCPL has started two units i.e. SEZ Trading Unit and SEZ Warehousing unit at Kandla Special Economic zone(KASEZ), Gandhidham Gujarat. Further, the company has also opened a Branch in Ras Al Khaimah Free Trade Zone, UAE. 

The company mainly sells to textile processing companies and factories. HCPL also provides auxiliary services including sourcing, logistics, laboratory testing, etc. The company has undertaken to manufacture of a chemical LABSA used in soaps & detergents with an installed capacity of 18000 metric tonnes per annum. 

The company is promoted by Mr. Om Prakash Mangal and his son Mr. Sanjayprakash Mangal along with other family members. Further, the day-to-day operations of the company are being handled by Mr. Sanjayprakash O. Mangal and Mr. Santosh Narayan Nambiar among others. The management has more than two decades of experience in the chemical industry. 

The company is the flagship company of the Hindprakash group engaged in the chemical business for the last eight decades. The group has been in the chemical business for more than three decades and is one of the largest trading houses in the country for dyes intermediates, textile auxiliaries, bulk chemicals, and multi-utility dyes. 

 

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 823.89 843.09
EBITDA Rs.Crs. 20.23 19.42
PAT Rs.Crs. 10.98 3.89
Tangible Net Worth Rs.Crs. 107.75 93.54
Total Debt/TNW Times 1.05 0.59
Current Ratio Times 1.19 1.26
KEY COVENANTS OF THE FACILITY RATED

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


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Not Applicable

ANY OTHER INFORMATION

Not Applicable

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 127.15
BWR BBB+/Stable
(Reaffirmation)
23Jul2021
BWR BBB+Stable
(Reaffirmation)
17Apr2020
BWR BBB+Stable
(Reaffirmation)
11Feb2019
BWR BBB+Stable
(Reaffirmation)
FB SubLimit LT NA
NA
NA
NA
17Apr2020
BWR A3
(Reaffirmation)
NA
NA
Fund Based ST 0.00
NA
NA
NA
NA
NA
11Feb2019
BWR A3
(Reaffirmation)
FB SubLimit ST (22.00)
BWR A2
(Reaffirmation)
23Jul2021
BWR A2
(Upgrade)
NA
NA
NA
NA
FB SubLimit ST (7.00)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
FB SubLimit ST (5.50)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
FB SubLimit ST (6.00)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
FB SubLimit ST (2.50)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
FB SubLimit ST (3.50)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Non Fund Based ST 41.25
BWR A2
(Reaffirmation)
23Jul2021
BWR A2
(Upgrade)
17Apr2020
BWR A3
(Reaffirmation)
11Feb2019
BWR A3
(Reaffirmation)
NFB SubLimit ST (4.00)
BWR A2
(Reaffirmation)
23Jul2021
BWR A2
(Upgrade)
NA
NA
NA
NA
NFB SubLimit ST (0.75)
BWR A2
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Grand Total 168.40 (Rupees One Hundred Sixty Eight Crores and Forty lakhs Only)
Rating Advisory, as on 04Aug2022
Press Release, as on 04Aug2022
As more than 12 months have elapsed since the last rating, a rating advisory is issued to inform that it has not been possible to review the rating within the stipulated time, mainly due to the non-receipt of essential information required for review. The rating review exercise will be carried out in due course.

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

Shashikala Umanath Hegde

Senior Ratings Analyst Board : +91 22 2831 1426, +91 22 2831 1439 shashikala.h@brickworkratings.com

Vidya Shankar

Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Hindprakash Chemicals Pvt. Ltd. (erstwhile Hindprakash Tradelink 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 Central Bank of India Cash CreditSanctioned 16.00 _ 16.00
Sub-Limit (EPC/FBD) Sanctioned (2.50)
Sub-Limit (ILC/FLC) Sanctioned (6.00)
2 Central Bank of India Cash CreditProposed _ _ 0.00
3 Central Bank of India Cash CreditProposed 7.50 _ 7.50
4 Central Bank of India Bank GuaranteeProposed _ 1.25 1.25
5 Central Bank of India GECLSanctioned 1.29 _ 1.29
6 Central Bank of India GECLSanctioned 0.63 _ 0.63
7 Central Bank of India ILC/FLCSanctioned _ 12.15 12.15
Sub-Limit (Forward Contract / LER) Sanctioned (0.75)
8 Central Bank of India ILC/FLCProposed _ _ 0.00
9 Punjab National Bank ILC/FLCSanctioned _ 11.00 11.00
Sub-Limit (Forward Contract limit / LER) Sanctioned (3.50)
10 Punjab National Bank GECLSanctioned 3.23 _ 3.23
11 Punjab National Bank GECLSanctioned 3.50 _ 3.50
12 Punjab National Bank Term LoanProposed 27.50 _ 27.50
13 Punjab National Bank Cash CreditSanctioned 34.00 _ 34.00
Sub-Limit (EPC/FBD) Sanctioned (7.00)
Sub-Limit (ILC/FLC) Sanctioned (22.00)
14 State Bank Of India (SBI) Cash CreditSanctioned 30.00 _ 30.00
Sub-Limit (EPC/ FBD) Sanctioned (5.50)
Sub-Limit (ILC/FLC) Sanctioned (0.00)
15 State Bank Of India (SBI) Cash CreditProposed _ _ 0.00
16 State Bank Of India (SBI) GECLSanctioned 2.20 _ 2.20
17 State Bank Of India (SBI) GECLSanctioned 1.30 _ 1.30
18 State Bank Of India (SBI) ILC/FLCSanctioned _ 16.85 16.85
Sub-Limit (Forward Contract/ LER) Sanctioned (4.00)
19 State Bank Of India (SBI) ILC/FLCProposed _ _ 0.00
Total 127.15 41.25 168.40
TOTAL (Rupees One Hundred Sixty Eight Crores and Forty lakhs Only)
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