PR

Press Release
APL METALS LIMITED
March 16, 2023
Rating Downgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	30.00	ACUITE C \| Downgraded	-
Bank Loan Ratings	87.00	ACUITE D \| Downgraded	-
Total Outstanding Quantum (Rs. Cr)	117.00	-	-

Rating Rationale

Acuité has downgraded its long term rating to ‘ACUITE D’ (read as ACUITE D) from ‘ACUITE BB+' (read as ACUITE double B plus) on the Rs.87.00 crore and also downgraded its long term rating to ‘ACUITE C’ (read as ACUITE C) from ‘ACUITE BB+' (read as ACUITE double B plus) on the Rs.30.00 crore bank facilities of APL Metals Limited.

Rating Rationale
The rating downgrade reflects the overdrawal in their working capital facilties for more than 30 days till March 2023 as per a written communication received from their lead banker. However, for the other lender there is no irregularity in account conduct.

About the Company

APL Metals Limited (APL), formerly known as Associated Pigments Limited, is a Kolkata based company, established in 1948 and commercial operations having begun in 1955. It is listed in Calcutta Stock Exchange Limited (CSE). APL is engaged in the manufacturing of refined lead, lead alloys and lead oxides with the combined installed capacity of 127730 MTPA, which are used in manufacturing of batteries, rolled extrusions, pigments used in paints, cable sheathing, among others.

Analytical Approach

Acuité has considered the standalone business and financial risk profile of APL while arriving at the rating

Key Rating Drivers

Strengths

Long track record of operations and experienced management
The company has a long operational track record in the lead industry for more than 60 years. AML’s board of directors comprise of Shri Sanjiv Nandan Sahaya as the Chairman and Managing Director, Mr. Raghav Bajoria, Mr. Prakash Kumar Damani and Mr. Rahul Damani as the other directors in the board with an experience of nearly two decades. Acuité believes that the long operational track record of AML along with the long experience of the management will continue to benefit the company going forward, resulting in steady growth in the scale of operations.

Weaknesses

Continuous overdrawal in working capital limits
AML has been facing significant liquidity pressure which has impeded continuous overdrawal in pre-shipment credit for more than 30 days till March 2023. These limits have been availed from their lead banker.

Moderate financial risk profile
The financial risk profile of the company is marked by modest net worth, high gearing and comfortable debt protection metrics. The net worth of the company stood modest at Rs.31.90 crore in FY 2022 as compared to Rs 33.38 crore in FY2021. The total networth of company includes RS.7.31crore of unsecured loan termed as quasi equity in FY2022 as the same amount is subordinated to bank debt. The gearing of the company deteriorated to 4.14 times as on March 31, 2022 when compared to 2.61 times as on March 31, 2021. The increase in gearing is mainly on account of increase in short term debt and long-term debt during the period. Interest coverage ratio (ICR) is comfortable and stood at 1.58 times in FY2022 as against 1.70 times in FY2021. The debt service coverage ratio (DSCR) of the company also stood moderate at 1.22 times in FY2022 as compared to 1.40 times in FY21. The net cash accruals to total debt (NCA/TD) declined to 0.05 times in FY2022 as compared to 0.09 times in FY21. Going forward, Acuite believes the financial risk profile of the company will remain moderate on account of steady net cash accruals and no major debt funded capex plan over the near term.

Rating Sensitivities

Timely servicing of debt obligations

Material covenants

None

Liquidity Position

Poor

The company has a poor liquidity position marked by the overdue in the working capital limits. The company generated cash accruals of Rs.6.41 crore in FY22. The company maintains unencumbered cash and bank balances of Rs.0.38 crore as on March 31, 2022 and the current ratio also stood moderate at 1.37 times as on March 31, 2022.

Outlook:

Not Applicable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	724.64	633.29
PAT	Rs. Cr.	4.96	6.72
PAT Margin	(%)	0.68	1.06
Total Debt/Tangible Net Worth	Times	4.14	2.61
PBDIT/Interest	Times	1.58	1.70

Status of non-cooperation with previous CRA (if applicable)

Care Ratings vide its press release dated July 25 2022, had reaffirmed the company to CARE B+; INC.

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm

Note on complexity levels of the rated instrument

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.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
29 Dec 2022	Bills Discounting	Long Term	30.00	ACUITE BB+ \| Stable (Downgraded from ACUITE BBB- \| Stable)
	Cash Credit	Long Term	15.00	ACUITE BB+ \| Stable (Assigned)
	Letter of Credit	Long Term	15.00	ACUITE BB+ \| Stable (Assigned)
	Letter of Credit	Long Term	33.00	ACUITE BB+ \| Stable (Downgraded from ACUITE BBB- \| Stable)
	Cash Credit	Long Term	24.00	ACUITE BB+ \| Stable (Downgraded from ACUITE BBB- \| Stable)
18 Oct 2021	Letter of Credit	Long Term	33.00	ACUITE BBB- \| Stable (Upgraded from ACUITE BB+ \| Stable)
	Cash Credit	Long Term	24.00	ACUITE BBB- \| Stable (Upgraded from ACUITE BB+ \| Stable)
	Bills Discounting	Long Term	30.00	ACUITE BBB- \| Stable (Upgraded from ACUITE BB+ \| Stable)
19 Aug 2020	Bills Discounting	Long Term	30.00	ACUITE BB+ \| Stable (Upgraded from ACUITE BB )
	Letter of Credit	Long Term	33.00	ACUITE BB+ \| Stable (Upgraded from ACUITE BB )
	Cash Credit	Long Term	24.00	ACUITE BB+ \| Stable (Upgraded from ACUITE BB )
19 Jun 2020	Bills Discounting	Long Term	30.00	ACUITE BB (Downgraded and Issuer not co-operating*)
	Letter of Credit	Long Term	33.00	ACUITE BB (Downgraded and Issuer not co-operating*)
	Cash Credit	Long Term	24.00	ACUITE BB (Downgraded and Issuer not co-operating*)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Indian Bank	Not Applicable	Bills Discounting	Not Applicable	Not Applicable	Not Applicable	30.00	Simple	ACUITE D \| Downgraded
Indian Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	24.00	Simple	ACUITE D \| Downgraded
Axis Bank	Not Applicable	Cash Credit	Not Applicable	Not Applicable	Not Applicable	15.00	Simple	ACUITE C \| Downgraded
Axis Bank	Not Applicable	Letter of Credit	Not Applicable	Not Applicable	Not Applicable	15.00	Simple	ACUITE C \| Downgraded
Indian Bank	Not Applicable	Letter of Credit	Not Applicable	Not Applicable	Not Applicable	33.00	Simple	ACUITE D \| Downgraded

Contacts

Analytical	Rating Desk
Pooja Ghosh Vice President-Rating Operations Tel: 022-49294041 pooja.ghosh@acuite.in Abhishek Dey Senior Analyst-Rating Operations Tel: 022-49294065 abhishek.dey@acuite.in	Varsha Bist Senior Manager-Rating Operations Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.