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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 625.00 | ACUITE A | Stable | Reaffirmed | - |
| Bank Loan Ratings | 25.00 | - | ACUITE A1 | Reaffirmed |
| Total Outstanding | 650.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed its long-term rating to ACUITE A (read as ACUITE A ) and its short-term rating to ACUITE A1 (read as ACUITE A one ) on the Rs. 650.00 Cr. bank facilities of Braithwaite and Co Limited. The outlook remains Stable.
Rationale for Reaffirmation The rating reflects increase in scale of operations along with decline in profitability margins. The rating also takes cognizance of the government ownership of the company and the revenue stream diversification initiatives taken by the company. The financial risk profile has remained moderate with gearing below unity and low debt coverage indicators. The rating also derives comfort from the adequate liquidity position of the company marked by surplus cash balances. The above mentioned rating strengths are however, partly offset by intensive working capital cycle and susceptibility to volatility in raw material prices. |
| About the Company |
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Originated as a British firm, named Braithwaite & Kirk (B & K) in 1884, Braithwaite & Co. (India) Ltd. established in Bengal in 1913 and subsequently nationalised as PSU in 1976. Braithwaite & Co Limited (BCL), located in Kolkata, was registered and incorporated in 1976 as a fully owned Government of India enterprise, under the Ministry of Heavy Industries. On 6 August 2010, BCL was taken over by the ministry of Railways from Ministry of Heavy Industries. The Company is owned by President of India (100%) through the nominees of the President of India under the Ministry of Railways.
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| Unsupported Rating |
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ACUITE A-/ Stable
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| Analytical Approach |
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Acuite has considered standalone business and financial risk profile of Braithwaite & Co Limited and the rating has been notched up considering the Government of India's undertaking.
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| Key Rating Drivers |
| Strengths |
| Established track record of business operations
The company has been around for more than 100 years. It was nationalised and taken over by the Indian government in 1976, and the Ministry of Railways has had administrative responsibility over it since August 2010. BCL is a well known manufacturer of railway wagons, and wagon components in India. The business has a proven track record of operations, which has allowed it to develop a thorough understanding of the industry dynamics. BCL has expanded its product line and is currently taking part in tenders for civil and bridge building. The company has been preferred by the Indian Railways as a prototype hub, and as a result, RDSO and BCL have signed a Memorandum of Understanding (MOU) for the design and development of new wagon prototypes for the Indian Railways. This will help the company become less dependent on conventional manufacturing methods and will also help it expand its market in the future. Furthermore, established relationships with customers have ensured brand and product loyalty, and those with suppliers have eased the procurement of raw materials. Increase in scale of operations The company achieved revenues of Rs.1103.91 Cr. in FY24 as against Rs.1044.76 Cr. in FY23 and Rs.765.36 Cr. in FY22. The slight rise in revenue is due to the significant increase in orders in hand. The order in hand comprises of Rs.2536.60 Cr. as on July 31, 2024. The OB /OI is 2.30 times as on July 31, 2024. It has reported revenues of Rs. 459 Cr. till July (FY25 prov.). Moderate Financial Risk Profile The financial risk profile of the company is marked by increase in net worth, low gearing and low debt protection metrics. The tangible net worth of the company improved to Rs.216.66 Cr. in FY24 as against Rs.200.00 Cr. in FY23 and Rs.150.09 Cr. in FY22 due to low accretion of reserves. Gearing of the company stood below unity at 0.14 times in FY24 compared to 0.03 times in FY22. Interest coverage ratio and Debt service coverage ratio stood low at 5.44 times in FY24 and 4.77 times in FY24 respectively. The Tangible Outside Liability/ Tangible Networth stood at 1.91 times in FY24 as against 1.85 times in FY23 and 1.55 times in FY22. Acuite believes the financial risk profile of the company will remain moderate on account of steady net cash accruals over the medium term. |
| Weaknesses |
| Decline in profitability margins
The EBITDA margin stood at 2.59 percent in FY24 as against 6.46 percent in FY23 and 6.14 times in FY22. The decline is attributed to the increase in raw material prices and the Company’s inability to pass on the same to end customers. The PAT margin stood at 1.49 percent in FY24 as against 4.76 times in FY23 and 5.54 times in FY22. The decrease in margin was due to one-time escalation cost related to the POH wagon workshop project. Although a Memorandum of Understanding (MoU) was signed with the railway authorities and approval was also obtained, resulting in the release of funds. The billing process was reversed due to unclear terms regarding costs. The reversal of this is expected to be recovered in the coming years. The decline is also due to the absence of execution of remunerative orders where there was margin pressure on account of high input cost. Acuite believes that the profitability margins will improve over the medium term. Intensive Working Capital Cycle The intensive working capital cycle is marked by Gross Current Assets (GCA) of 190 days in FY24 as compared to 182 days in FY23 and 161 days in FY22. The inventory days stood at 61 days in FY24 as against 80 days in FY23 and 61 days in FY22. The debtor days stood at 32 days in FY24 as against 35 days in FY23 and 56 days in FY22. The other current assets include work done but bills not raised (considered good) of Rs.169.86 Cr, advances recoverable in cash or kind of Rs.31.32 Cr, lien marked FDR of Rs.9.50 Cr, security deposits (considered good) of Rs.8.86 Cr. and others. The creditor days stood at 87 days in FY24 as against 78 days in FY23 and 88 days in FY22. Acuite believes the working capital cycle to remain on similar levels over the medium term. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The company’s liquidity position is adequate, marked by Net Cash Accruals of Rs.20.44 Cr. against a nil long-term debt repayment over the same period. The current ratio stood comfortable at 1.40 times in FY24 as against 1.41 times in FY23 and 1.51 times in FY22.
The cash and bank balance stood at Rs.85.50 Cr in FY24 as against Rs.16.93 Cr in FY23 and Rs.19.10 Cr in FY22. Out of Rs.85.50 Cr, Rs.76.00 Cr is for the poly house project received as a mobilization advance from the Uttarakhand Government on March 31, 2024. Due to restrictive conditions, these funds are currently held in a current account earning no interest and can be utilized for specific purposes related to the project. The consolidated fund-based limit utilization is (0.80) % and non-fund-based limit utilization is 33.95%. The intensive working capital cycle is marked by Gross Current Assets (GCA) of 190 days in FY24 as compared to 182 days in FY23 and 161 days in FY22. Acuite believes the liquidity position of the company will be sustained marked by steady net cash accruals and low reliability on external borrowings. |
| Outlook: Stable |
| Acuité believes that the outlook of the company will remain 'Stable' over the medium term backed by its established market position, strong order book position, comfortable business and financial risk position and diversification in its product mix. The outlook may be revised to ‘Positive’ if the company register a higher than expected growth in revenues while improving its operating profitability. Conversely, the outlook may be revised to ‘Negative’ in case of further elongation in the working capital cycle or a decline in profitability. |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 1103.91 | 1044.76 |
| PAT | Rs. Cr. | 16.47 | 49.73 |
| PAT Margin | (%) | 1.49 | 4.76 |
| Total Debt/Tangible Net Worth | Times | 0.14 | 0.00 |
| PBDIT/Interest | Times | 5.44 | 25.10 |
| 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 • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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