Brickwork Ratings downgrades the ratings for the Bank Loan Facilities of Rs. 66.52 Crs. of Prime Comfort Products Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (13 Jul 2020) |
Present | ||
| Fund Based | 77.39 | 66.52 | Long Term |
BWR BBB-/Stable to Negative
Reaffirmation |
BWR BB +
/Stable Downgrade |
| Grand Total | 77.39 | 66.52 | (Rupees Sixty Six Crores and Fifty Two lakhs Only) | ||
Brickwork Ratings (BWR) downgrades the long-term rating to BWR BB+ (Stable) from BWR BBB- (Negative) for the bank loan facilities of Prime Comfort Products Pvt. Ltd. (PCPPL or the company)
The rating downgrade is on account of deteriorated financial risk profile of PCPPL with weak DSCR, elongated conversion cycle, declined and low profit margins and cash accrual, besides raw material fluctuation and foreign currency fluctuation risk. The rating however draws comfort from experienced management.besides comfortable current ratio.
Credit Strengths:
Key Promoters of the company Mr. Praduman Patel along with wife Mrs. Renu Patel have more than 3 decades of experience in the flexible polyester & polyether PU Foam industry.
The entity’s ability to meet its current liabilities from current assets, indicated by a comfortable current ratio of 1.36X in FY21(provisional) against 1.41x in FY20.
The company has an modest interest service coverage ratio (ISCR) of 1.45x in FY21 (provisional) against 1.62x in FY20. Debt service coverage ratio (DSCR of the company is weak at 0.80x in FY21(provisional) against 0.85x in FY20. As advised, the company had availed the moratorium period for 6 month during FY 2020-21 and paid half amount of Rs. 4.45 Crs during the period of FY 2020-21 against cash accruals (profit after tax + depreciation) of Rs 5.07 Crs in FY21 provisional.
The entity’s net profit margins are low and declined from 0.51% in FY20 to 0.20% in FY21 provisional and operating profit margin declined from 8.55% in FY20 to 7.81% in FY21 (provisional) due to increased raw material prices, resulting from Covid 19 impact and volatility in crude oil prices.
Currently the company has not adopted hedging policy completely to mitigate currency fluctuation risk which could adversely impact the profitability in case of adverse conditions.
Total Insurance claim of the company is Rs. 36 Crs with respect to loss due to fire in March 2017.The company has received an interim amount of Rs. 7.76 crs as on 26-10-2018 and Rs 10.17 Crs. on 28-08-2019 from the insurance company. The claim is still under process for the balance amount. Any shortfall in the claim amount would adversely affect the profitability of the company.
The operation cycle of the company is stretched i.e.145 days in FY21 provisional (123 days in FY20) . The conversion cycle is high mainly due to high inventory days of 143 in FY21 provisional (133 days in FY20).
BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating. Reference may be made to the detailed Rating Criteria hyperlinked.
RATING SENSITIVITIES
Upward: BWR may revise the ratings upwards if there is rebound in topline and margins as projected along with reduction in leverage and gearing.
Downward: BWR may revise the ratings downwards if the company achieves notably lower revenue than expected, and a deterioration in the debt protection metrics and liquidity.
The company had low cash accruals (profit after tax + depreciation) of Rs 5.07 Crs against original current portion of long term debt (CPLTD) of Rs 9.09 Crs in FY21 in FY21(provisional). As advised, the company had availed the moratorium period for 6 month during FY 2020-21 and paid half amount of Rs. 4.45 Crs during the period of FY 2020-21 which helped to maintain required liquidity. BWR expects the company to meet its CPLTD of Rs 10.07 Crs for FY22 .Average working capital utilization is approximately 90% for last 6 months till Aug, 2021.
ABOUT THE ENTITYPrime Comfort Products Private Limited(PCPPL), incorporated in November 2009, is an ISO 9001:2008 certified manufacturer of flexible polyester & polyether PU Foam. PCPPL has been managed and promoted by Mr. Praduman Patel along with his wife Mrs. Renu Patel and sons Mr. Rohan Patel Mr. Krish Patel. Company is engaged in manufacturing of various kinds of PU Foams, Mattress, Pillows and Cushions like fresh foam covered mattress, coir champ mattress, back support mattress, luxe rebond mattress, spring zing mattress etc. It has a manufacturing facility at Greater Noida,U.P, with an annual current capacity of 16000 MT and manufacturing unit at Ahmedabad, Gujarat with an annual current capacity of 10,000 MT.
Refresh mattresses is a brand of Prime Comfort Products Pvt. Ltd.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Provisional) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 207.60 | 217.72 |
| EBITDA | Rs.Crs. | 16.21 | 18.61 |
| PAT | Rs.Crs. | 0.40 | 1.12 |
| Tangible Net Worth | Rs.Crs. | 53.84 | 53.43 |
| Total Debt/Tangible Net Worth | Times | 2.39 | 2.45 |
| Current Ratio | Times | 1.51 | 1.41 |
NA
NA
ANY OTHER INFORMATIONNA
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 | 66.52 |
BWR BB+/Stable
(Downgrade) |
13Jul2020 |
BWR BBB-Stable to Negative
(Reaffirmation) |
12Feb2019 |
BWR BBB-Stable
(Assignment) |
NA |
NA
|
| Grand Total | 66.52 | (Rupees Sixty Six Crores and Fifty Two 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.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Raman Thakur Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com |
Tanu Sharma Director - Ratings tanusharma@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 | Union Bank of India | Cash CreditSanctioned | 48.00 | _ | 48.00 | |
| 2 | Union Bank of India | Term LoanSanctioned | 18.52 | _ | 18.52 | |
| Total | 66.52 | 0.00 | 66.52 | |||
| TOTAL (Rupees Sixty Six Crores and Fifty Two lakhs Only) | ||||||
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