RATING RATIONALE
30Sep2021
Jalnidhi Bitumen Specialties Pvt. Ltd.
Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Jalnidhi Bitumen Specialties Pvt. Ltd, aggregating Rs. 41.35 Crs.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (10 Jun 2020) |
Present | ||
| Fund Based | 34.45 | 34.45 | Long Term |
BWR BBB-/Stable
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
| (0.00) | (4.50) | ||||
| (18.50) | (18.50) | ||||
| (4.95) | (1.30) | ||||
| Non Fund Based | 6.90 | 6.90 | Short Term |
BWR A3
Reaffirmation |
BWR A3
Reaffirmation |
| (4.90) | (4.90) | ||||
| (3.55) | (3.55) | ||||
| Grand Total | 41.35 | 41.35 | (Rupees Forty One Crores and Thirty Five lakhs Only) | ||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK
BWR has reaffirmed the ratings for the long term bank loan facilities of Jalnidhi Bitumen Specialties Pvt. Ltd (JBSPL or “The Company) for Rs.34.35 Crs. to BWR BBB-/ Stable and has reaffirmed the ratings for their short term bank loan facilities for Rs. 6.90 Crs at BWR A3, (aggregate rated amount increased to Rs.41.35 Crs). The reaffirmation in the rating factors in the Long track record of promoters and the company, diversified product profile, wide geographical presence and diversified customer base, comfortable debt-protection metrics during FY21(Provisional) and adequate liquidity. The rating is however constrained by sluggish revenue generation during FY20 and FY21(Provisional), modest and volatile profitability, and high supplier concentration.
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.
For arriving at the ratings, Brickwork Ratings has relied upon the Audited Financial statements of FY20 , Provisional Financial statements of FY21 . as well as Projections for FY22. and other information as available in the public domain, as well as information / clarifications provided by the company and its bankers.
KEY RATING DRIVERS
Credit Strengths:
-
Long track record of promoters and the company :
The Company has an established track record of more than three decades in the industry since inception. Moreover the promoters have extensive experience in running the business. Further, the Company is also supported by a professional team to look after its day to day operations.
-
Diversified product profile :
The company has a variety of products in its portfolio like cationic bitumen emulsion, polymer modified bitumen, crumb rubber modified bitumen, blown bitumen, hessian felt, app membrane, micro surfacing etc. which assist it in generating strong revenue growth. Moreover, JBSPL also has a service division to undertake job works for waterproofing assignments.
-
Wide geographical presence and diversified customer base :
The ratings also take cognisance of the fact that the company has a well established relationship with diverse PSUs and private players. The Company has developed a Pan-India presence through its eight branches situated in different parts of the country which includes states like Gujarat, Haryana, Chhattisgarh, Orissa, Bihar, Assam and Jharkhand apart from having its headquarters at Kolkata, West Bengal. These branches cater to the needs of customers in different parts of the country, economically and in a timely manner. Customer concentration of the company is moderate as the top five customers contributed 30% of the total revenue during FY21(P).The rest of the revenue is contributed by diversified clients.
-
Comfortable debt-protection metrics during FY21(P) :
Credit metrics of the company were comfortable as reflected from ISCR of 2.12 times during FY21 (P), as against ISCR of 2.18 times in FY20. Marginal deterioration in ISCR is on account of marginal decline in EBITDA of Rs.8.31 Crs in FY21 (P) as against EBITDA of Rs.8.76 Crs in FY20. Total Debt/TNW and TOL/TNW also remained comfortable, although the ratios deteriorated slightly from FY20 levels due to increase in total debt. Total Debt/TNW stood at 1.15 times in FY21 (P) (FY20: 1.03 times) and TOL/TNW at 1.60 times (FY20: 1.60 times). The Tangible Net Worth of the company increased to Rs.34.77 Crs in FY21 (P) as against Tangible Net Worth of Rs.31.73 Crs in FY20, on account of ploughing back of profit.
-
Sluggish revenue generation during FY20 and FY21(Provisional) :
The company reported total operating income of Rs.181.37 Crs in FY21(P) and Rs.177.20 Crs in FY20 as against operating income of Rs.209.99 Crs in FY19. Sluggish operating income in FY21(P) and FY20 as compared to operating income of FY19 was primarily due to COVID scenario worldwide. The Company’s production facilities were interrupted during the lockdown period and as a result its capacity utilization fell to 32% in FY21(P) as against 35% in FY20. However, the impact of the slowdown will be moderated by the fact that bitumen used in construction of roads is an essential item, and thus one of the major requirements for road construction companies. The Company managed to achieve Operating Income of Rs.181.37 Crs in FY21(P) which is slightly higher than the operating Income of Rs.177.20 Crs achieved in FY20.
-
Modest and volatile profitability :
Profitability of the company remained modest and volatile as reflected from EBITDA Margin of 4.58% during FY21(P) and 4.92% in FY20 (FY19: 4.32%). Volatility in profit is mainly due to the volatile nature of the price of its main raw materials Bitumen and Polymer, which are directly linked to crude oil prices. Thus, any increase or decrease in crude oil prices affects the profitability of the business.
-
High supplier concentration :
Supplier concentration of the company is high as the company is wholly dependent on Indian Oil Corporation Limited for sourcing of Bitumen. High supplier concentration is however offset by a long standing relationship with IOCL for more than two decades.
Standalone
LIQUIDITY INDICATORS - Adequate
EBITDA of Rs.8.31 Crs.in FY21(P) (Rs.8.76 Crs for FY20) was sufficient to cover the interest and finance charges of Rs.3.91 Crs (Rs. 4.03 Crs for FY20). Net cash accruals was Rs.4.10 Crs for FY21(P) as against Net cash accruals of Rs.4.28 Crs in FY20. Current ratio improved to 1.62 times in FY21(P) as against 1.50 times in FY20. ISCR was 2.12 times in FY21(P) as compared to ISCR of 2.18 times in FY20. The average utilization of WC limits in the past 6 months is at around 80% as confirmed by the bankers. The company has also availed GECL of Rs.5.25 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 ENTITYJalnidhi Industries was started in 1990 as a partnership firm, subsequently, in order to increase its horizon, the firm was reconstituted as a private limited company by the name of M/s Jalnidhi Bitumen Specialities Private Limited (JBSPL) in 1994 by Mr Sanjay Kumar Dalmia and Ms Smriti Dalmia. The Company is into manufacturing of bitumen based products such as blow and polymer modified bitumen (PMB), bitumen emulsions, crumb rubber, and roofing felts, micro surfacing etc. The products are used mostly in construction of roads, bridges, flyovers, airport runways, tunnels and dams. and also trades in these products. In addition to that, also has service division to undertake job works for waterproofing assignments and others. It sells its products under the brand name of ‘Hind’ and ‘Jai Hind’ .
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Provisional) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 181.37 | 177.80 |
| EBITDA | Rs.Crs. | 8.31 | 8.76 |
| PAT | Rs.Crs. | 3.04 | 3.05 |
| Tangible Net Worth | Rs.Crs. | 34.77 | 31.73 |
| Total Debt/Tangible Net Worth | Times | 1.15 | 1.03 |
| Current Ratio | Times | 1.62 | 1.50 |
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
| Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 34.45 |
BWR BBB-/Stable
(Reaffirmation) |
10Jun2020 |
BWR BBB-Stable
(Reaffirmation) |
25Jan2019 |
BWR BBB-Stable
(Reaffirmation) |
NA |
NA
|
| FB SubLimit | LT | (4.50) |
BWR BBB-/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| (18.50) |
BWR BBB-/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| (1.30) |
BWR BBB-/Stable
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| Non Fund Based | ST | 6.90 |
BWR A3
(Reaffirmation) |
10Jun2020 |
BWR A3
(Reaffirmation) |
25Jan2019 |
BWR A3
(Reaffirmation) |
NA |
NA
|
| NFB SubLimit | ST | (4.90) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
| (3.55) |
BWR A3
(Reaffirmation) |
NA |
NA
|
NA |
NA
|
NA |
NA
|
||
| Grand Total | 41.35 | (Rupees Forty One Crores and Thirty Five 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 | DBS Bank India Limited | Cash CreditSanctioned | 9.50 | _ | 9.50 | |
| 2 | DBS Bank India Limited | Letter of CreditSanctioned | _ | 2.00 | 2.00 | |
| 3 | ICICI Bank | Cash CreditSanctioned | 19.80 | _ | 19.80 | |
| Sub-Limit (WCDL I) Sanctioned | (18.50) | |||||
| Sub-Limit (WCDL II) Sanctioned | (1.30) | |||||
| 4 | ICICI Bank | Letter of CreditSanctioned | _ | 3.55 | 3.55 | |
| Sub-Limit (Bank Guarantee) Sanctioned | (3.55) | |||||
| Sub-Limit (Letter of Credit) Sanctioned | (4.90) | |||||
| 5 | State Bank Of India (SBI) | Cash CreditSanctioned | 5.15 | _ | 5.15 | |
| Sub-Limit (FCDL) Sanctioned | (4.50) | |||||
| 6 | State Bank Of India (SBI) | Bank GuaranteeSanctioned | _ | 1.35 | 1.35 | |
| Total | 34.45 | 6.90 | 41.35 | |||
| TOTAL (Rupees Forty One Crores and Thirty Five lakhs Only) | ||||||
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