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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 20.52 | ACUITE B+ | Stable | Reaffirmed | - |
| Total Outstanding | 20.52 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE B+’ (read as ACUITE B plus) on the Rs.20.52 crore bank facilities of Accura Inks Private Limited (AIPL).
The outlook is 'Stable'. Rationale for rating reaffirmation: The rating reaffirmation factors in the stable operating performance of the company, marked by improvement in the operating income and profitability margins with a moderate financial risk profile. The company's revenue stood at Rs.34.50 crore in FY2023 compared to revenue of Rs.26.78 crore in FY2022. Subsequently, the company has recorded a turnover of Rs.20.06 crore in 6MFY2024. This marginal increase in the revenues in FY2023 is due to increase in the demand of the products. However the ratings are constrained by the moderately intensive working capital operations and the stretched liquidity position of the company. |
| About the Company |
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Incorporated in 2014, AIPL is a Gujarat-based company promoted by the Kanoria family. The company is engaged in manufacturing of gravure inks used for printing. The company has its manufacturing facility located at Silvassa, Dadra and Nagar Haveli.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profiles of AIPL to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Experienced management
AIPL is based in Gujarat and was incorporated in 2014. The company is promoted by the Kanoria family, who have an experience of nearly two decades in the printing and packaging industry. The day-to-day operations of the company are managed by the promoter along with experienced senior management team who are ably supported by a strong line of mid- level managers. Acuité believes that AIPL will benefit from experienced management which helped the company to maintain long-standing relations with customers and suppliers. Moderate financial risk profile The company has a moderate financial risk profile marked by tangible net worth of Rs.24.64 crore as on 31 March 2023 as against Rs.21.67 crore as on 31 March 2022. The increase in the net worth is due to the accretion of profits to reserves. The gearing level of the company stood at 1.09 times as on 31 March 2023 as against 0.75 times as on 31 March 2022. The total debt of the company stood at Rs.26.92 crore as on March 31, 2023. The total debt comprised of long-term debt of Rs.18.36 crore and short-term debt of Rs.0.82 crore and unsecured loans of Rs. 1.97 crore as on 31 March 2023. The coverage ratios of the company stood moderate with Interest Coverage Ratio (ICR) of 4.23 times for FY2023 against 2.88 times for FY2022. The Debt Service Coverage Ratio (DSCR) stood at 1.52 times for FY2023 against 1.12 times for FY2022. The total outside liabilities to tangible net worth (TOL/TNW) of the company stood at 1.42 times for FY2023 as against 0.98 times in FY2022. Acuité believes that the financial risk profile of the company is expected to remain at the same level over the medium term.
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| Weaknesses |
| Modest scale of operation
AIPL’s scale of operations is modest marked by operating income of Rs.34.50 crore in FY2023 as against Rs.26.78 crore in FY2022. Further, AIPL’s margin stood at 19.80 percent in FY2023 as against 18.32 percent in FY2022. The company’s major customer is TCPL Packaging Limited who accounted for more than 95 percent of its sales in the last two years. The high customer concentration renders the revenue growth and profitability susceptible to the growth plans, procurement and credit policies of its key customers. The company’s ability to improve its scale of operations and profitability margins will remain a key rating monitorable. |
| Rating Sensitivities |
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Substantial improvement in the scale of operations while maintaining profitability.
Deterioration in liquidity position and Elongation of working capital cycle. |
| Liquidity Position |
| Stretched |
| The company has a stretched liquidity position marked by low net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs.4.17 crore in FY2023 compared against maturing debt obligation of Rs.2.19 crore over the same period. The cash accruals of the company are estimated to remain in the range of Rs 5-6 Cr crore during 2024-25 period while its maturing debt obligations is estimated to be in the range of Rs.4.40 -5.80 Cr crore during the same period. The company’s reliance on working capital borrowings remain high at ~97 percent in last six months ended March’ 2023 albeit moderate gross current asset days of 55 as on March 31, 2023. The company maintains unencumbered cash and bank balances of Rs.0.0037 crore as on March 31, 2023. The current ratio stood at 0.41 times as on March 31, 2023. |
| Outlook: Stable |
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Acuité believes that the company will maintain a 'Stable' outlook over the medium term on account of experienced management. The outlook may be revised to 'Positive' in case of substantial and sustained growth in revenue and profitability. Conversely, the outlook may be revised to 'Negative' in case of deterioration in the financial and liquidity profile or lower than expected generation of revenue and profitability margins. |
| Other Factors affecting Rating |
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None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 34.50 | 26.78 |
| PAT | Rs. Cr. | 2.33 | 2.00 |
| PAT Margin | (%) | 6.76 | 7.48 |
| Total Debt/Tangible Net Worth | Times | 1.09 | 0.75 |
| PBDIT/Interest | Times | 4.23 | 2.88 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not Applicable |
| Any other information |
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None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.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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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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