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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 70.00 | ACUITE BB+ | Stable | Assigned | - |
| Bank Loan Ratings | 20.00 | - | ACUITE A4+ | Assigned |
| Total Outstanding Quantum (Rs. Cr) | 90.00 | - | - |
| Rating Rationale |
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Acuite has assigned its long term rating of ACUITE BB+(read as ACUITE double B plus) and short term rating of ACUITE A4+ (read as ACUITE A four plus) on the Rs.90.00 Crore bank facilities of A-Class Marble India Private Limited (A-CMIPL). The outlook is 'Stable'.
Rating assigned The rating assigned takes into account the established track record of operations and experienced management of more than two decades in marble industry. Further, the rating takes into consideration growing revenue which stood at Rs.239.40 Crore in FY23 against Rs.193.05 Crore in FY22 and Rs.118.77 Crore in FY21. The increase in revenue is contributed by increase in the capacity utilization along with post-Covid market opportunities. These strengths are however, partly offset by the intensive working capital nature of operations marked by elongated inventory days of 235 days as on 31st March, 2023 along with risk associated for not adopting any hedging policy to mitigate the currency fluctuation risk as majority of its raw material procurements are through import and Exposure to the risk associated with ongoing project. Further, the rating factors in average financial risk profile characterized by gearing at 1.69 times as on 31st March, 2023 and debt protection metrics with DCSR stood at 1.55 times as on 31st March, 2023. |
| About the Company |
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Kishangarh, Rajasthan based, A-Class Marble India Private Limited was incorporated in July 2005 and promoted by Mr. Rai Chand Bhandari and his sons, Mr. Rajesh, and Mr. Ramesh. The company is engaged in processing and trading of marbles and slabs. The Present directors of the company are Mr. Rai Chand Bhandari, Mr. Rajesh Bhandari, and Mr. Ramesh Bhandari.
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| Analytical Approach |
| Acuite has considered the standalone financial and business risk profiles of A-CMIPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Experienced Management and established track record of operations
A-CMIPL has been engaged in processing and trading of marbles and slabs since 2006. Currently the company is managed by Mr. Rai Chand Bhandari, Mr. Rajesh Bhandari, and Mr. Ramesh Bhandari who has an experience of about more than two decades in same industry. Their experience into this line of business would help the company to flourish. Acuite believes that A-CMIPL will continue to benefit from its established track record and experience of promoters in this line of business. Augmentation in business risk profile The operations of the company have improved with a significant increase in the scale of operations. The company has achieved a top-line of Rs.239.40 Crore in FY23 against Rs.193.05 Crore in FY22 and Rs.118.77 Crore in FY21. The company has shown a growth in the top line due to unlocked market opportunities post Covid along with increase in the capacity utilization on y-o-y basis. Further, the EBITDA margins of the company has shown a marginal improvement which stood at 10.62% in FY23 against 10.48% in FY22. The PAT margin of the company stood at 3.36% in FY23 against 3.00% in FY22. Further, the company is expected to achieve the top line under the range of Rs.270-Rs.300 Crore with margins more or less in the same range in near to medium term. Acuite believes that operation of the company may continue to improve over the medium term backed by the capital expenditure under progress. |
| Weaknesses |
| Working capital intensive operations
The working capital cycle of the company is elongated due to nature of business marked by GCA days which stood at 273 days as on 31st March 23 against 303 days as on 31st March 22. The GCA days are improved on an account of inventory days which stood at 235 days as on 31st March 23 against 263 days as on 31st March 22. Due to nature of business and also as it imports it majority of requirement, company has to keep high level of inventory. Further, the debtor days of the company stood at 53 days as on 31st March 23 against 47 days as on 31st March 22. The average debtor days maintained by the company is 50-60 days. On the other hand, the creditor days of the company stood at 98 days as on 31st March 23 against 120 days as on 31st March 22. Acuite believes that working capital operations may continue to remain intensive considering the higher inventory requirements. Average financial risk profile The financial risk profile of the company is average marked by moderate net-worth, gearing and debt protection metrics. The net worth of the company stood at Rs.62.58 Crore as on 31st March 2023 against Rs.52.34 as on 31st March 2022 Crore. The increase in net worth is majorly due to accretion of profits. Further, the total debt of the company stood at Rs.105.57 Crore as on 31st March 2023 against Rs.85.60 Crore as on 31st March 2022. The debt of the company increased in FY23 which is related to the capital expenditure related to the new display showroom of which commencement date is not finalized yet. The interest coverage ratio of the company stood at 2.57 times as on 31st March 2023 against 2.41 times as on 31st March 2022. The debt service coverage ratio of the company stood at 1.55 times as on 31st March 23 against 0.54 times as on 31st March 22. Also, the TOL/TNW ratio stood at 2.80 times as on 31st March 23 against 2.90 times as on 31st March 22. The gearing of the company stood at 1.69 times as on 31st March 23 against 1.64 times as on 31st March 22. Acuite believes that the financial risk profile of the company may deteriorate in near term as company is planning to take more debt in coming year for the capital expenditure. Exposure to risk related to ongoing project and forex fluctuation risk In FY23, the company undertook initial phase of the project by purchasing land near to the existing premises. The loan for same has been sanctioned to company and this capital expenditure is related to the expansion of existing manufacturing facility along with opening a new-brand display showroom. The project is at the initial stage and hence exposed to implementation risk and funding risk as loan of approximately Rs.19 Crore yet to be sanctioned. Timely completion and successful stabilisation of operations at the new unit remain a key rating sensitivity factor. Further, the company imports approx. 70% of its raw material requirement, hence the profitability are susceptible to foreign currency fluctuation risk. |
| Rating Sensitivities |
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| Material covenants |
| None. |
| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate. The company has generated net cash accruals of Rs.12.66 crore as on 31st March 23 against the debt repayment obligations of Rs.4.64 crore in the same period. Going forward, the company is expected to generate enough net cash accruals under the range of Rs.15-16Crore against the debt repayment obligation of Rs.6.30 Crore in the near to medium term. The current ratio of the company stood at 1.41 times as on 31st March 23 against 1.38 times as on 31st March 22. The average bank limit utilization of fund based limits stood moderate at 88.78% for last 12 months ending March 2023 and non-fund based bank facilities stood at 16% ending in last 12 months ending Mar 23.
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| Outlook: Stable |
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Acuité believes that A-CMIPL will continue to maintain a ‘Stable’ outlook over the medium term backed by its promoter’s extensive industry experience and growing scale of operations. The rating outlook may be revised to 'Positive' in case of sustainable growth in revenues while maintaining its profitability and improvement in working capital operations. Conversely, the outlook may be revised to 'Negative' if the working capital cycle further deteriorates leading to deterioration of financial risk profile and stretched liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 239.40 | 193.05 |
| PAT | Rs. Cr. | 8.05 | 5.79 |
| PAT Margin | (%) | 3.36 | 3.00 |
| Total Debt/Tangible Net Worth | Times | 1.69 | 1.64 |
| PBDIT/Interest | Times | 2.57 | 2.41 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| Not applicable. |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Entities In Manufacturing Sector:- 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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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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| Rating History : |
| Not Applicable |
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