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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 85.00 | ACUITE A | Stable | Assigned | - |
| Bank Loan Ratings | 340.00 | - | ACUITE A1 | Assigned |
| Total Outstanding | 425.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has assigned the long-term rating at ‘ACUITE A’ (read as ACUITE A) and the short-term rating to ‘ACUITE A1’ (read as ACUITE A one) on the Rs.425.00 Cr. bank facilities of Goa Carbon Limited (GCL). The outlook is 'Stable'.
Rationale for rating assigned The rating assigned factors in the established track record of the company along with the extensive experience of the promoters. The management of the company have an experience of more than 3 decades in the CPC industry. This is also reflected in the year-on-year increase in quantity sold by the company along with improvement in the operating margins from 7.4 percent in FY22 to 12.23 percent in FY24. The rating further takes into account the healthy financial risk profile of the company marked by healthy net-worth, healthy gearing and strong debt protection metrics. The rating also takes into consideration the moderate working capital operations of the company marked by the GCA days of 117 days in FY24 consisting majorly of inventory days for the company. However, these strengths are partly offset by the company’s susceptibility to fluctuation in raw material prices, which in turn also affects the realizations for the company. Further company operates in a highly restricted environment where each year the specific quota of import is allowed by Directorate General of Foreign Trade (DGFT). The rating also factors in the customer concentration risk as more than 95 percent of the revenue is marked from just three customers. |
| About the Company |
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Goa Carbon Limited (GCL) was incorporated in 1967 with its registered office at Dempo House, Campal, Panaji-Goa. GCL is engaged in manufacturing and marketing Calcined Petroleum Coke (CPC). It has manufacturing facilities located in Goa, Bilaspur and Paradeep with combined capacity of 308,000 metric tonnes per annum. Mr. Shrinivas V Dempo is the chairman of the company. GCL is a part of Dempo Group which has an established presence in Iron Ore mining and exports, Construction, Publishing, Ship Building, Travel and Trade etc.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of the Goa Carbon Limited (GCL) to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Established track record of operation with experienced management
Goa Carbon Limited has an established track record of operations of over five decades, along with experienced management. The company is promoted by Dempo group, which was established in 1941 and is into various business such as Iron Ore mining and exports, Construction, Publishing, Ship Building, Travel and Trade, among others. GCL, incorporated in 1967 is into manufacturing of CPC i.e. Calcined Petroleum Coke and is one of the top producers in the country. The chairman of the company Mr. Shrinivas Dempo has an extensive experience of over three decades in the industry. The operating performance of the company has also improved as reflected in the year on year improvement in quantity sold. However, the realizations stood lower which led to decline in the revenue booked by the company. Further it also witnessed an improvement in operating margins year on year to 12.23 percent in FY24 as against 10.72 percent in FY23 and 7.40 percent in FY22. Further, the company is into the manufacturing of CPC which is majorly used by Aluminium smelters for making Anodes. CPC sold by the company is consumed by the domestic Aluminium manufactures namely Hindalco Industries, Vedanta, Bharat Aluminium, Kirloskar Ferrous, etc. On the other side the company procures it raw material which is RPC, Raw Petroleum Coke majorly from foreign countries such as UAE, Oman, Kuwait, etc. Acuite believes that the established position in the industry and extensive experience of the management will help the company to maintain a stable business profile in the CPC segment. Healthy Financial risk profile The financial risk profile of the company remained healthy marked by a healthy net worth, low gearing, and healthy debt protection metrics. The net worth of the company stood healthy at Rs. 247.55 Cr. as on March 31, 2024 as against Rs. 186.03 Cr. as on March 31, 2023. The increase in net worth is primarily due to the accretion of profits to the reserves. The gearing of the company stood at 1.35 times as on March 31, 2024 as against 2.27 times as on March 31, 2023. The TOL/TNW stood at 1.48 times as on March 31, 2024 as against 3.13 times as on March 31, 2023. The debt protection metrics also stood healthy with DSCR and Interest coverage ratio standing at 4.34 times and 5.96 times respectively as on 31st March 2024. Acuite believes that the financial risk profile of the company may continue to remain healthy with steady cash accruals to fund capex, if any in the near to medium term. Moderate working capital operations The working capital operations of the company remains moderate marked by GCA days of 117 days in FY 2024 as against 140 days in FY 2023. The GCA days are comprised of high inventory and moderate debtor. The inventory stood at 86 days in FY 2024 as against 98 days in FY 2023. Majority of raw material close to 95 percent is being imported from foreign countries. So considering the sailing time of the vessel from different locations and conversion time of the stock into finished product, the company generally keeps inventory of three months. The debtor days stood at 21 days in FY 2024 as against 41 days in FY 2023. However, the creditors days stood at 7 days in FY2024 as against 46 days in FY 2023. Acuite believes that working capital operations of the company may continue to remain moderate considering the improving receivable mechanism. |
| Weaknesses |
| Profitability susceptible to price volatility and cyclicality of the industry
Calcined Petroleum Coke (CPC) is produced from “green” petroleum coke, which is a byproduct of oil refining. CPC is extensively used to make anodes for the aluminium, steel and titanium smelting industry. The company’s performance remains vulnerable to cyclicality in the aluminium and steel sector as demand for the same depends on the performance of the end user segments such as electronics, aviation, real estate etc. The RPC and CPC prices are predominantly influenced by China and other global factors. However, the Indian Calcination Industry is a Restricted Environment where every year the quota is being allotted by DGFT based on the requirement of Smelters and other manufacturers. Thus, the operating performance of the company is exposed to fluctuations in the prices of raw materials, realization from finished goods and allocation of quota by DGFT. Exposure to customer concentration risk GCL's customer base is heavily dominated by Hindalco Industries Limited and Vedanta Aluminium & Power Limited and Bharat Aluminium which together account for more than 95 percent of the total revenues. However, this are leading aluminium producers in the country, so the risk is mitigated to quite some extent. Acuité believes that the ability of the company to expand its customer base in order to further mitigate the risk will be critical. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The Company had Cash and Bank balance of Rs. 37.14 Crores as on March 31, 2024. The company has only short-term borrowings in the form of Cash credit and Buyer’s credit as of March 31, 2024. The company generated NCA of Rs. 87.98 crores in FY24 as against no major repayment obligations in the same year. The current ratio of the company stood at 1.39 times in FY 2023-24. The working capital operations of the company also remain moderate marked by the GCA days of 117 days in FY24. The Average Bank limit utilisation for last 12 months stood at 56.73 percent on closing basis.
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| Outlook : Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 1057.31 | 1364.36 |
| PAT | Rs. Cr. | 85.50 | 80.59 |
| PAT Margin | (%) | 8.09 | 5.91 |
| Total Debt/Tangible Net Worth | Times | 1.35 | 2.27 |
| PBDIT/Interest | Times | 5.96 | 3.38 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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