Brickwork Ratings reaffirms the long term ratings for the Bank Loan Facilities of Rs. 47.44 Crs. of Suyash Chemical & Fertilizer (P) Ltd
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (04 Dec 2020) |
Present | ||
| Fund Based | 36.28 | 36.28 | Long Term |
BWR BBB-/Stable
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
| Non Fund Based | 11.16 | 11.16 | Long Term |
BWR BBB-
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
| Grand Total | 47.44 | 47.44 | (Rupees Forty Seven Crores and Forty Four lakhs Only) | ||
Brickwork Ratings has reaffirmed the rating of Suyash Chemical And Fertilizer (P) Ltd for Long Term Bank loan facilities as BWR BBB-(Outlook:Stable). The rating takes into account the experience of the promoters, improvement in financial risk profile, diversified revenue streams and low customer concentration risk. However, the rating is constrained by intense competition, raw material price fluctuation risk, environmental and regulatory risks of the paper industry. The outlook has been considered to be ‘Stable’ as BWR believes that the risk profile of the company will be maintained over the medium term, indicating that there is a low likelihood of rating change over the medium term.
KEY RATING DRIVERSCredit Strengths:
The company is managed by Mr. Ramji Jaiswal and three other directors. Promoters have more than two decades of experience in the paper industry. Their healthy relationships with customers and suppliers and diversified end-user of product will continue to support the business risk profile.
Net profit margin stood at 1.69% in FY21 as compared to 1.65% in FY20.. Gearing (Total Debt/TNW) of the company improved to 1.10x in FY21 as compared to 0.96x in FY20.
Around 70% of the revenue is generated from the Paper division and 30 % of revenue is from the Agro division of the company. The company has well diversified customers.
The company faces stiff competition from other players in the industry, which limits its pricing flexibility and bargaining power with customers, thereby putting pressure on its revenues and margins. Furthermore, thin margins put pressure on the liquidity profile as well.
Company is using raw materials such as waste paper, agro products, bakkar etc based on its availability. Seasonality of the crops require the company to maintain a higher inventory of raw material. Besides, the uncertain climatic conditions may sometimes lead to loss of production. Government regulations regarding MSP could lead to increased procurement cost which is also a challenge for Agro division of the company. As far as the paper business is concerned it is exposed to inherent risk of raw material price fluctuation as the cost of waste paper is volatile.
The production of paper emits various pollutants as a part of the manufacturing process. This has been a cause of concern and the pollution control boards are introducing stricter norms day after day to contain the level of pollution caused by this industry.
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
Going forward, the company’s ability to maintain its financial risk profile and business risk profile would be the key sensitivities over the short to medium term.
Positive : The rating outlook may be revised to positive if the company demonstrates to regain the earlier topline level. Maintaining its business risk profile would also be the credit positive.
Negative : The rating may be downgraded if there is further fall in its topline along with any delay in debt servicing and deterioration in the liquidity profile.
LIQUIDITY INDICATORS - Adequate
1. The Cash and Bank balances as on 31.3.2021 is Rs. 37.15 Cr.
2. Net Cash Accruals in FY21 is Rs. 5.20 Cr. against which Current portion of long term debt(CPLTD) is Nil. Net Cash Accrual is estimated to improve in FY22 at Rs. 7.63 Cr. against which CPLTD is Nil.
3. Debt Protection metrics are moderate i.e. ISCR and DSCR at 2.53X and 1.97X in FY20. Both the coverage ratios have increased to 2.64X and 2.03X in FY21. As per FY22 (Prov.) ISCR and DSCR is estimated to be 3.51X and DSCR 1.83X.
4. CC utilization is 84.38%.
Hence, the Liquidity of the company is adequate.
NDS of the company is received from April'21 to November'21
ABOUT THE ENTITYIncorporated in the year 1994, Suyash Chemical & Fertilizers Pvt Ltd has two divisions paper division and Agro division. It is engaged in processing wheat into flour, maida, suji under Agro division and manufacturing of kraft paper, core pipes, paper tubes and tissue paper which are used in the packaging industry. Paper unit of the company is located at Basti, Uttar pradesh and flour mill is located at Gorakhpur (U.P). Paper division contributes to around 70% of the total revenue of the company. The company is promoted by Mr Ramji Jaiswal along with other associates.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 133.96 | 131.92 |
| EBITDA | Rs.Crs. | 9.37 | 9.91 |
| PAT | Rs.Crs. | 2.27 | 2.17 |
| Tangible Net Worth | Rs.Crs. | 42.01 | 39.74 |
| Total Debt/Tangible Net Worth | Times | 1.10 | 0.96 |
| Current Ratio | Times | 1.97 | 1.84 |
NIL
CARE BB-/Stable Issuer Not Cooperating dated 14 Oct'2021
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 | 36.28 |
BWR BBB-/Stable
(Reaffirmation) |
04Dec2020 |
BWR BBB-Stable
(Reaffirmation) |
29Nov2019 |
BWR BBB-Stable
(Reaffirmation) |
31Oct2018 |
BWR BBB-Stable
(Assignment) |
| Non Fund Based | LT | 11.16 |
BWR BBB-/Stable
(Reaffirmation) |
04Dec2020 |
BWR BBB-
(Reaffirmation) |
29Nov2019 |
BWR BBB-
(Reaffirmation) |
NA |
NA
|
| Grand Total | 47.44 | (Rupees Forty Seven Crores and Forty Four 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 | |
|---|---|
|
Ashish Kumar Ratings Analyst ashish.k@brickworkratings.com |
Hari Kishan Yadav Associate Director - Ratings hari.ky@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 | Punjab National Bank | Term Loan | 2.75 | _ | 2.75 | |
| 2 | Punjab National Bank | Cash Credit | 25.21 | _ | 25.21 | |
| 3 | Punjab National Bank | Bank Guarantee | 11.16 | _ | 11.16 | |
| 4 | Punjab National Bank | GECL | 5.80 | _ | 5.80 | |
| 5 | Punjab National Bank | Covid Term Loan | 2.52 | _ | 2.52 | |
| Total | 47.44 | 0.00 | 47.44 | |||
| TOTAL (Rupees Forty Seven Crores and Forty Four lakhs Only) | ||||||
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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 11,400 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.
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