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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 207.04 | ACUITE A- | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 19.02 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 73.90 | - | ACUITE A2+ | Reaffirmed & Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 299.96 | - | - |
| Rating Rationale |
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Acuité has reaffirmed & withdrawn its long term rating of ACUITE A- (read as ACUITE A minus) & short term rating of ACUITE A2+ (read as ACUITE A two plus) on bank facilities of Rs 280.94 Cr of BMW Industries Limited. The long term rating is withdrawn on the proposed bank facilities of Rs 19.02 Cr of BMW Industries Limited. The rating is being withdrawn on account of the request received from the company and the NOC / NDC received from the banker as per Acuité’s policy on withdrawal of ratings. Rationale for the Reaffirmation The rating factors in the improving operating performance and healthy financial risk profile of BMWIL in FY2023, supported by a long term offtake agreement with Tata Steel Limited (TSL). The rating continues to draw comfort from the extensive experience of the promoters in the steel industry. The rating is, however, constrained by the company's working capital intensive nature of operations along with the company’s exposure to the inherent cyclicality in the steel industry. |
| About the Company |
| Incorporated in 1999, BMW Industries Limited is a West Bengal based company engaged in processing of continuous galvanized lines on behalf of Tata Steel Limited (TSL) for around three decades. The company converts all the Hot Rolled (HR) materials supplied by Tata Steel limited into Galvanised Corrugated (GC) sheets which are sold under their flagship brand ‘TATA Shaktee’. The company is the largest conversion agent supplying galvanized sheets on such a large scale to TSL. The company is also engaged in manufacturing of mild steel, and long and flat products such as tubular poles and structures. In October 2022, the company entered into a long term agreement with TSL for conversion of Billet to TMT bars for a period of 3 years, till September 2025. It has five manufacturing facilities, of which two are in West Bengal and three in Jamshedpur, Jharkhand. The units in West Bengal are dedicated for manufacturing of mild steel, long and flat products. The units in Jamshedpur are dedicated for conversion on behalf of TSL. The company is promoted by Mr. Ram Gopal Bansal and his family. |
| Analytical Approach |
| Acuité has taken a standalone view of the business and financial risk profile of BMWIL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Long term association with TSL buoyed by experienced management The company has a long track record of around four decades in the steel industry and has been associated with TSL since last two decades. The company is promoted by Mr. Ram Gopal Bansal and his family. Currently, his two sons, Mr. Harsh Kumar Bansal and Mr. Vivek Kumar Bansal look after the day-to-day operations of the company. In 2012, the company entered into an agreement to do the conversion work through continuous galvanising line and is the sole conversion agent of TSL for the roofing division. BMW converts all the Hot Rolled (HR) materials supplied by TATA Steel limited into GC sheets which are used mainly for roofing purpose, cover the Steel Structure and Industrial Sheds, Warehousing Buildings, etc. the strategic importance to TSL will continue to benefit BMW in the long run which ensures adequate revenue visibility and sustenance of strong business risk profile. BMWIL witnessed an improvement in its scale of operations marked by its revenues at Rs 508.60 crore as against Rs 410.33 Cr in FY22. Further, EBITDA Margin for the FY23 stood at 21.77% as against FY22 at 25.20%. The Profit after tax margins (PAT) stood at 8.68% in FY23 as against 8.00% in FY22. Healthy financial risk profile The financial risk profile of the company remained healthy marked by healthy net worth, gearing ratio & debt protection metrics. The net worth stood at Rs 581.22 Cr as on 31 March 2023 as against Rs 460.08 Cr same period last year. The gearing level of the company remained at 0.37 times as on 31 March 2023 as against 0.52 times same period last year. Also, the Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio stood at 0.59 times in as on 31 March 2023 compared against 0.74 times as on 31 March 2022. The debt protection matrices of the company is improving marked by Interest Coverage Ratio (ICR) of 5.01 times for FY23 and Debt service coverage ratio (DSCR) of 1.80 times for the same period. Acuité believes that the financial risk profile of the company will remain healthy over the medium term. |
| Weaknesses |
| Working capital intensive nature of operations The operations of the company remained working capital intensive in nature marked by GCA Days of 267 days for FY23 as compared against 260 days for FY22. Furthermore, the receivables days stood 106 days in FY23 & 102 days in FY22. The inventory days of the company stood at 123 days for FY23 as against 164 days for FY22. The creditor days stood at 27 days for FY23 compared against 25 days for FY22. |
| Rating Sensitivities |
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| All Covenants |
| None |
| Liquidity Position |
| Adequate |
| The liquidity position of the company remains adequate marked by average net cash accruals of Rs 77.55 Cr in FY23 against maturing debt obligations of Rs 32.51Cr for the same period. The current ratio of the company remains at 1.94 times as on 31 March 2023. The company has unencumbered cash and bank balances of Rs 7.12 Cr as on 31 March 2023. |
| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| Not Applicable |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 508.60 | 410.33 |
| PAT | Rs. Cr. | 44.15 | 32.83 |
| PAT Margin | (%) | 8.68 | 8.00 |
| Total Debt/Tangible Net Worth | Times | 0.37 | 0.52 |
| PBDIT/Interest | Times | 5.01 | 4.84 |
| 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 • 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 |
| 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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