C.P. Re-Rollers Limited

Brickwork Ratings reaffirms the ratings and revises the outlook for the enhanced aggregate Bank Loan Facilities of Rs. 46.22 Crs. of C.P. Re-Rollers Limited, while simultaneously removing it from the Issuer Not Cooperating category.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (04 Nov 2021)	Present
Fund Based	28.40	36.84	Long Term	BWR BBB- /Negative Reaffirmation/ISSUER NOT COOPERATING*	BWR BBB - /Stable Reaffirmation and change in Outlook
Non Fund Based	9.38	9.38	Short Term	BWR A3 Reaffirmation/ISSUER NOT COOPERATING*	BWR A3 Reaffirmation
Grand Total	37.78	46.22	(Rupees Forty Six Crores and Twenty Two 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

Brickwork Ratings has relied upon the Audited financials of the company for FY 19, FY 20 and FY 21 and Projected financials of FY 22 and FY 23, information available in public domain as well as feedback from the company and its bankers, for arriving at the present rating.

Based on a review, Brickwork Ratings has reaffirmed the rating and revised the outlook for the enhanced long term bank loan facilities of C.P. Re-Rollers Limited for Rs. 36.84 Crs at BWR BBB-, Stable (enhanced from Rs.28.40 Crs) and has reaffirmed the rating of short term bank loan facilities of Rs. 9.38 Crs at BWR A3 - aggregate rated amount enhanced to Rs.46.22 Crs from Rs.37.78 Crs, while simultaneously removing the ratings from the “Issuer Not Cooperating” category. The rating reaffirmation factors in the experienced management and long track record of operations, comfortable financial risk profile, product mix profile of the company, strategic location of the plant and adequate liquidity. The rating is, however, constrained by the Working Capital intensive of business, low revenue visibility, raw material and product price volatility and presence in the competitive steel industry.

BWR believes that the business risk profile of C.P. Re-Rollers Limited. will be maintained over the medium term, and the 'Stable' outlook assigned indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures on a continuous basis.

KEY RATING DRIVERS

Credit Strengths:

Experienced Management and long track records of operations :
The key promoter Mr. Kumar Chand Chawla has an experience of over three decades in the Iron and Steel Industry. The other two Directors of the Company Mr. Shankar Chawla and Mr. Amit Kumar Chand Chawla with experience of around two decades manages the day to day business and overall operations of the Company. The company has established its track record of operations for more than two decades.
Comfortable financial risk profile :
The financial risk profile of the company remained comfortable marked by moderate scale of operations and profitability, healthy Total Tangible Networth, low leverage and comfortable debt coverage indicators. The Revenue of the company has increased to Rs.176.48 Crs in FY 21 compared to Rs.163.01 Crs in FY 20, EBITDA has increased to Rs.9.66 Crs in FY 21, compared to Rs.8.94 Crs in FY 20. The debt to equity ratio remained low at 0.90 times as on 31st March, 2021 compared to 0.79 times as on 31st March, 2020. The interest coverage ratio (ISCR) and debt service coverage ratio (DSCR) of the company are also comfortable at 2.29 times and 1.46 times respectively in FY21 as against 2.29 times and 1.41 times in FY 20.
Product Mix :
The company is not dependent on any single product for its revenue. During FY20, the company booked revenue by selling different products like MS Angles, MS Billets, Channels, TMT Bars etc. TMT Bar sales contributed the major share of around 60% in FY21 (FY20: 57%). The company generated revenue from 13 products during FY21.
Strategic location of the plant :
CPRRL’s plant is located in the industrial belt of Durgapur in West Bengal where the raw materials are available in abundance. Further, the coal and iron-ore rich states of Jharkhand and Orissa are also located nearby. The proximity to the raw material sources reduces the transportation cost to the company. Besides, the region has a large number of steel manufacturers as well as end users. Hence, the company has a large ready market to sell its products.

Credit Risks:

Working Capital intensive nature of business :
The operations of the company remained working capital intensive as the company engaged in manufacturing of Steels & allied products where high debtors and inventory are maintained.
Low revenue visibility :
The company generally receives orders on a monthly basis and executes the same as per customer requirement. As the orders are small and monthly in nature, the uncertainty of revenue generation, except in the immediate future, is a matter of concern.
Raw material and product price volatility :
The Company is exposed to the volatility in raw material prices i.e. sponge iron and pig iron, and also the volatility in selling price of its products.
Presence in the competitive Steel industry :
The company is into manufacturing of Iron & Steel and steel allied products which is highly fragmented and competitive in nature due to low entry barriers.

RATING SENSITIVITIES

Positive Triggers:

Increase in scale of operations and profits.
Improvement in EBITDA margin and Net profit Margin on a consistent basis
Increase its Net Worth, improvement in the operating efficiency of the company

Negative Triggers:

Decline in Revenue & deterioration of the financial position of the company, including deterioration in liquidity on a continuous basis.
Delay in payments of its debt obligations.

LIQUIDITY INDICATORS - Adequate

The liquidity of the company stands adequate as reflected by the comfortable cash credit utilization ~at 89% for the last six months ended February 2022. The company presently does not have any major debt-led capex plans and long term repayment obligations. Liquidity is further supported by comfortable ISCR and DSCR of 2.29 times and 1.46 times respectively in FY 2021. Further the current ratio stood comfortable at 1.39 times in FY 21 (FY20:1.29 times) while cash and Bank Balances stood comfortable at Rs.2.54 Crs in FY 21. The company has also not availed the Covid 19 Relief moratorium. Net Cash accruals of Rs.5.05 Crs are adequate to take care of repayment obligations amounting to Rs.2.00 Crs .

ABOUT THE ENTITY

C.P Re Rollers Ltd (CPRRL) is a Kolkata based company promoted by Mr. Kumar Chand Chawla along with his son Mr. Shankar Chawla and his nephew Amit Kumar Chand Chawla in 2001. CPRRL is into manufacturing of steel products like TMT Bars, Mild Steel Rounds, Channels, Wire Rods etc. It has an installed capacity of 90,000 TPA of TMT bars and 60,000 TPA of M.S Billets. Its manufacturing unit is located in Durgapur and its registered office is in Kolkata.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	176.48	163.01
EBITDA	Rs.Crs.	9.66	8.94
PAT	Rs.Crs.	1.79	1.13
Tangible Net Worth	Rs.Crs.	55.41	53.62
Total Debt/Tangible Net Worth	Times	0.90	0.79
Current Ratio	Times	1.39	1.29

KEY COVENANTS OF THE FACILITY RATED

Usual covenants as applicable to bank loan ratings

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ACUITE BB-/A4+, Issuer Not Cooperating, as per press release dated December 03, 2021.

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	36.84	BWR BBB-/Stable (Reaffirmation and change in Outlook)	04Nov2021	BWR BBB- Negative (Reaffirmation/ISSUER NOT COOPERATING*)	27Apr2020	BWR BBB- Stable (Reaffirmation)	19Mar2019	BWR BBB- Stable (Assignment)
		0.00	NA	NA	NA	04Aug2020	BWR BBB- Stable to Negative (Reaffirmation)	NA	NA
Non Fund Based	ST	9.38	BWR A3 (Reaffirmation)	04Nov2021	BWR A3 (Reaffirmation/ISSUER NOT COOPERATING*)	27Apr2020	BWR A3 (Reaffirmation)	19Mar2019	BWR A3 (Assignment)
		0.00	NA	NA	NA	04Aug2020	BWR A3 (Reaffirmation)	NA	NA
Grand Total		46.22	(Rupees Forty Six Crores and Twenty Two lakhs Only)

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

Manufacturing Companies

Analytical Contacts
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

C.P. Re-Rollers Limited

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	Punjab National Bank	Cash Credit - Sanctioned	28.40	_	28.40
2	Punjab National Bank	Bank Guarantee - Sanctioned	_	9.38	9.38
3	Punjab National Bank	GECL - Sanctioned	5.60	_	5.60
4	Punjab National Bank	Common Covid Emergency Line of Credit (CCECL) - Sanctioned	2.84	_	2.84
Total			36.84	9.38	46.22
TOTAL (Rupees Forty Six Crores and Twenty Two lakhs Only)

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