RATING RATIONALE
16Jan2023

Signet Industries Ltd

Brickwork Ratings reaffirm the ratings for the Bank Loan Facilities of Rs. 369.38 Crs. of Signet Industries Ltd

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(03 Nov 2021)
Present
Fund Based 205.81 199.38 Long Term BWR BBB+
Upgrade
BWR BBB + /Stable
Reaffirmation
Non Fund Based 170.00 170.00 Short Term BWR A2
Upgrade
BWR A2
Reaffirmation
Grand Total 375.81 369.38 (Rupees Three Hundred Sixty Nine Crores and Thirty Eight 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
Note: Note: This rating pertains to an existing assignment received prior to October 06, 2022.


RATING ACTION / OUTLOOK

BWR has reaffirmed the long term and short term ratings to BWR BBB+/Stable /A2 .The rating reaffirmation  is underpinned by comfortable scale of operations and capital structure over the years. The rating continues to factor in the experienced management of company coupled with long track record,  diversified product portfolio ,comfortable  scale of operations, tangible net worth, healthy order book position and stable industry scenario with strong government support in the form of Government’s thrust on infrastructure development, expansion in the housing sector and increasing  demand for agricultural production. The ratings are, however, constrained due to thin profit margins, high interest & finance cost, major contribution of the trading segment to the overall sales which in itself is a thin margin business for the company and working capital intensive nature of operations.

 The rating outlook is stable as the company has been able to sustain the revenues from business operations even during the  Covid-19 pandemic. Also the future growth of India HDPE/PVC pipes and fittings market is expected to be led by rapidly increasing population leading to increased demand for agricultural production, expanding housing sector and significant role played by the government in the development of the irrigation infrastructure sector in the country. The company has order book position of Rs 511.23 Crs which shows revenue visibility in medium term.

 

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has applied the standalone approach . For detailed information view hyperlinks below .  

RATING SENSITIVITIES

Positive: BWR may revise the ratings upward if there is a sustained improvement in SIL’s  scale of operations ,credit profile, coupled with improvement in EBITDA margins on a sustained basis .

Negative: BWR may revise the ratings downwards if there is a sustained deterioration in the company’s EBITDA and debt protection metrics and/or stretch in its working capital/liquidity

LIQUIDITY INDICATORS - Adequate

 Working capital utilization for last nine months ending Dec 2022 is 76 % . Company registered cash accruals of Rs 21.88Crs in FY 22 against repayment of Rs  6.07Crs  . Company  registered cash accruals of Rs 16.85 Crs against CPLTD of Rs 23.29 Crs . Current ratio stood at 1.42 x in FY 22.   Even though DSCR is  less than 1 x in FY 22 , there is no delay in debt servicing  , source of repayment is VAT /GST refund /received  of Rs 10 Crs out  of total outstanding of Rs 15 Crs as on 31st March 2021. Also the company's  overall cash flow from operations improved in FY 22 as compared to FY 21 due to changes in working capital  which is the source of repayment in FY 22. Cash flow from operations increased to Rs 33.57 Crs in FY22 as compared to Rs 6.57 Crs  due to reduction in receivables , short term loans and advances ,  other current assets . Average Liquidity index stood at 1.64 x in FY 22-23 which  is expected to keep liquidity in adequate range 

ABOUT THE ENTITY

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
FY 22-23
(Audited - Midterm_H1)
Operating Revenue Rs.Crs. 877.26 826.99 441.78
EBITDA Rs.Crs. 61.72 62.53 29.90
PAT Rs.Crs. 8.24 13.95 3.35
Tangible Net Worth Rs.Crs. 195.14 188.59 197.00
Total Debt/TNW Times 1.57 1.56 1.53
Current Ratio Times 1.42 1.37 1.42

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

CRISIL  has reaffirmed  rating to B+/A4 on 28 Feb 2022 on account of continued non cooperation from company  over the years.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2023) 2022 2021 2020
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 199.38
BWR BBB+/Stable
(Reaffirmation)
NA
NA
06Oct2021
BWR BBB
(Downgrade/ISSUER NOT COOPERATING*)
06Jul2020
BWR BBB+
(Reaffirmation)
0.00
NA
NA
NA
03Nov2021
BWR BBB+
(Upgrade)
NA
NA
Non Fund Based ST 170.00
BWR A2
(Reaffirmation)
NA
NA
06Oct2021
BWR A3+
(Downgrade/ISSUER NOT COOPERATING*)
06Jul2020
BWR A2
(Reaffirmation)
0.00
NA
NA
NA
03Nov2021
BWR A2
(Upgrade)
NA
NA
Grand Total 369.38 (Rupees Three Hundred Sixty Nine Crores and Thirty Eight lakhs Only)
Rating Advisory, as on 14Nov2022
Press Release, as on 14Nov2022
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

Karan Ahluwalia

Senior Rating Analyst Board : +91 11 2341 2232 karan.a@brickworkratings.com

Ravi Rashmi Dhar

ravi.d@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Signet Industries 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 4.00 _ 4.00
2 Bank of Baroda Letter of CreditSanctioned _ 28.00 28.00
3 Punjab National Bank Letter of CreditSanctioned _ 18.00 18.00
4 Punjab National Bank Cash CreditSanctioned 28.00 _ 28.00
5 ShamRao Vitthal Co-operative Bank Term LoanSanctioned 4.38 _ 4.38
6 UCO Bank Cash CreditSanctioned 102.00 _ 102.00
7 UCO Bank Bank GuaranteeSanctioned _ 20.00 20.00
8 UCO Bank Letter of CreditSanctioned _ 72.00 72.00
9 Union Bank of India Bank GuaranteeSanctioned _ 10.00 10.00
10 Union Bank of India Letter of CreditSanctioned _ 22.00 22.00
11 Union Bank of India Cash CreditSanctioned 61.00 _ 61.00
Total 199.38 170.00 369.38
TOTAL (Rupees Three Hundred Sixty Nine Crores and Thirty Eight lakhs Only)
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