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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 15.00 | ACUITE BB- | Stable | Upgraded | - |
| Bank Loan Ratings | 0.40 | - | ACUITE A4 | Reaffirmed |
| Total Outstanding | 15.40 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has upgraded its long-term rating to 'ACUITE BB-' (read as ACUITE double B minus) from 'ACUITE B+' (read as ACUITE B plus) and reaffirmed short-term rating at 'ACUITE A4' (read as ACUITE A four) on the Rs. 15.40 crore bank facilities of Altra Pure Chem (APC). The outlook is 'Stable'.
Rationale for Rating The rating upgrade and migration from 'Issuer non cooperating' takes into account the extensive experience of management in the chemical industry along with its long-established track record of operations which has helped the firm in securing a long-standing relation with its suppliers and customers. The rating also factors in growth reflected in its operating income to Rs.103.09 Cr. in FY 2024 from Rs.93.63 Cr. in FY 2023. However, the above-mentioned strengths are constrained by firm’s moderate working capital operations, stretched liquidity position, and average financial risk profile which is characterized by a low net worth of Rs.12.82 Cr. in FY24. Further the rating also factors in the sizeable investment of the firm in its group company. |
| About the Company |
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Altra Pure Chem (APC) established in 2000. The Company is engaged in trading and manufacturing of chemicals and solvents such as Iso Propyl Alcohol, Acetone and Acetone Nitryl. Mr. Mithun G Patil is the proprietor of the company. The registered office of company is in Dombivli.
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| Unsupported Rating |
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Not Applicable
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| Analytical Approach |
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Acuite has considered the standalone business and financial risk profile of Altra Pure Chem (APC)to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Experienced management and established track record of operations
The firm is currently managed by Mr. Mithun G Patil and a team of experienced personnel. The proprietor Mr. Mithun possesses over 20 years of experience in this line of business. His long-standing experience and the firm’s established track record of operations since inception in 2000, have helped the firm to build strong relationships with suppliers and customers in the industry. Further, The proprietor’s experience is also reflected in the stable scale of operations, with the firm’s revenue increasing to Rs. 103.09 Cr. in FY24 as against Rs. 93.63 Cr. in FY23 and Rs.120.49 crore in FY22. Further, the company has achieved a sales of around Rs. 55.73 Cr. for H1FY2025.
Acuite believes that firm shall continue to benefit from the experience of its management and its track record going ahead. |
| Weaknesses |
| Average Financial Risk Profile
The financial risk profile of the firm is marked average on account of low net worth, average gearing and moderate debt protection metrics., The networth of the firm stood low at Rs.12.82 Cr. as on 31st March 2024 as compared to Rs 11.04 Cr. as on 31st March 2023. The gearing of the firm stood average at 2.72 times as on 31st March 2024 as compared to 2.67 times as on 31st March 2023. Further, debt protection metrics stood moderate with Interest coverage ratio (ICR) stood at 2.44 times in FY2024 as against 2.36 times in FY 2023. The debt service coverage ratio (DSCR) of the firm stood at 1.27 times in FY2024 as compared to 1.83 times in the previous year. The TOL/TNW of the firm stood at 5.60 times in FY2024 as against 5.42 times in FY2023. The Debt-EBITDA of the firm stood at 5.27 times in FY2024 as against 3.18 times in FY2023. The net cash accruals to total debt (NCA/TD) stood at 0.07 times in FY2024 as compared to 0.11 times in the previous year. The financial risk profile of the firm is expected to improve over the medium term on account of modest cash accrual generation, however, the effect of any major debt funded capex on the financial risk profile will remain a key monitorable.
Moderate Working Capital Management
The working capital operations of the firm are moderate in nature marked by GCA days of 109 days in FY2024 against 65 days in FY2023. This increase in the GCA days are primarily driven by high inventory days, which extended to 59 days in FY24, from 6 days in FY23. The reason for high inventory days is on account of significant raw material procured by the firm towards the year end. The debtors’ days stood at 9 daysin FY24, as against 28 daysin FY23. Further, as of August 2024, the firm's outstanding debtors stands at Rs. 8.61 Cr., notably, all the receivables are in less than 4 months. Additionally, creditors’ days stood at 117 days in FY2024, compared to 107 days in the previous year. Furthermore, the reliance on working capital limits remained high as it remains almost fully utilized over the last 5 months ending September 2024 for fund-based limits.
Acuite believes that the working capital operations of the firm will continue to remain in similar range due the nature of its business. Sizeable Investments in group companies Despite the firm's relatively low net worth, it holds substantial investments totalling to Rs. 31.59 Cr. as of March 31, 2024. This investment is primarily in the form of long term investment and short term loans to one of its group company Altra Agro Chem Pvt Ltd. The firm has an exposure of around Rs.41 crore towards its group company to support their business operations and capital expenditures. Acuite believes that the performance of Altra Agro Chem Pvt Ltd will remain a key monitorable. |
| Rating Sensitivities |
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Ability to improve its scale of operations and profitability.
Any further deterioration of its financial risk profile and liquidity position. Restricting any further elongation in its working capital cycle. |
| Liquidity Position |
| Stretched |
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The firm’s liquidity position is marked as stretched, on account of its modest net cash accruals of Rs. 2.35 Cr. in FY2024 as against its maturity debt obligations of around Rs. 1.26 Cr. Further, it is expected that the firm will generate cash accruals in the range of around Rs. 2.83 – Rs. 3.14 Cr. as against maturing repayment obligations of around Rs.1.25 – Rs.1.28 Cr. over the medium term. Further, the working capital management of the firm is moderate marked by GCA days of 109 days in FY2024 as against 65 days in FY2023. However, the reliance on fund-based working capital limits is high as it remains almost fully utilized over the past 5 months ending September 2024. Further, the current ratio stands low at 0.73 times as on 31st March 2024 as against 0.49 times as on 31st March 2023.
Going ahead, the liquidity is expected to remain on similar levels on account of modest accrual generation against repayment obligation and limited buffer available from working capital limits. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 103.09 | 93.63 |
| PAT | Rs. Cr. | 1.98 | 2.82 |
| PAT Margin | (%) | 1.92 | 3.01 |
| Total Debt/Tangible Net Worth | Times | 2.72 | 2.67 |
| PBDIT/Interest | Times | 2.44 | 2.36 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any other information |
| 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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