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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 8.24 | ACUITE BB+ | Downgraded & Withdrawn | - |
| Bank Loan Ratings | 55.06 | ACUITE BB+ | Stable | Downgraded | Negative to Stable | - |
| Bank Loan Ratings | 8.59 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 0.11 | - | Not Applicable | Withdrawn |
| Total Outstanding | 55.06 | - | - |
| Total Withdrawn | 16.94 | - | - |
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Rating Rationale |
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Acuité has downgraded the long-term rating at “ACUITE BB+” (read as ACUITE double B plus) from “ACUITE BBB-” (read as ACUITE triple B minus) on the Rs.55.06 Cr. bank facilities of Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited) . The outlook is revised from Negative to Stable.
Acuité has downgraded and withdrawn the long-term rating at “ACUITE BB+” (read as ACUITE double B plus) from “ACUITE BBB-” (read as ACUITE triple B minus) on the Rs.8.24 Cr. bank facilities of Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited). Further, Acuité has withdrawn the long-term and short-term rating on the Rs. 7.11 Cr. bank facilities of without assigning any rating as it is a proposed facility of Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited).The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company. Further, Acuité has withdrawn the long-term on the Rs. 1.59 Cr. bank facilities of without assigning any rating as the instrument is is fully repaid of Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited). The rating has been withdrawn supported by the request received from the company along with no due certificate received from the lender as per Acuité's policy on withdrawal of ratings as applicable to the respective facility / instrument. Rationale for downgrade The recommendation factors the decline in the company’s scale of operations, marked by an operating income of Rs. 111.94 Cr. in FY2024 (Prov.) as against Rs. 129.75 Cr. in FY2023. The operating margin of the company declined to 7.33% in FY 2024(Prov.) and incurred losses of 5.05% in FY 2024 (Prov.) as compared to 2.89% in FY2023. The liquidity profile of the company is poor marked by insufficient net cash accrual which stood at Rs.2.06 Cr against maturing debt obligation of Rs.9.98 Cr. The working capital operations of the company is intensive marked by high GCA days of 191 days as on 31st March 2024 (Prov.) and the average fund based bank limit utilization remained almost fully utilized at an average of 99.31% for the past 14 months ended February 2024. Further, the financial risk profile of the company deteriorated sharply as suggested by coverage indicators i.e. interest coverage ratio (ICR) which declined in FY 2024 (Prov.) and stood at 1.31 times against 3.44 times in FY 2023 and debt service coverage ratio (DSCR) went down below unity and stood at 0.53 times in FY 2024 (Prov.). |
| About the Company |
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Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited) incorporated in the year 2016 is a Bikaner, Rajasthan based entity engaged in the business of manufacturing Ceramic, Glazed Vitrified and Wall Tiles. The company sells its products in domestic market through its wide network of more than 200 dealers spread across the states in Northern India like Punjab, Haryana, Rajasthan, Gujarat, Uttar Pradesh, Uttarakhand amongst others. The directors included Mr. Mansukh Khodabhai Ughareja, Mr. Hirani Dilipbhai Mohanbhai, Mr. Punit Mansukhbhai Ughreja, Mr. Sidharth Gupta, Mr. Ajay Kumar Gupta, Mr. Narendra Gupta and Ms. Sonal Agarwal.
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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 Ceramax Granito Limited (Erstwhile Ceramax Granito Private Limited) to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Experienced management in the ceramics industry
CGL incorporated in the year 2016 is engaged in manufacturing of Ceramic, Glazed Vitrified and Wall tiles. It is promoted by Mr. Kunj Bihari Gupta (Chairman) and his son Mr. Sidharth Gupta (Director). Also, the company has a qualified team of senior management supporting the promoters. The promoters along with key managerial personnel have an experience of over four decades in the ceramics industry. Acuité believes that CGL will continue to benefit from its experienced management which will help the company to establish a healthy relationship with its customers and suppliers. |
| Weaknesses |
| Moderately Intensive Working Capital Management
The working capital operations of the company is intensive marked by high GCA days of 191 days as on 31st March 2024 (Prov.) as compared to 172 days as on 31st March 2023. Further, the debtor days stood at 57 days as on 31st March 2024 (Prov.) as compared to 51 days in the previous year. On the other hand, the creditor days stood at 253 days as on 31st March 2024 (Prov.) as compared to 193 days in the previous year. The inventory days of the company remains high which stood at 124 days as on 31st March 2024 (Prov.) as compared to 120 days in the previous year due to nature of operations. Further, working capital limits remained almost fully utilized at an average of 99.31% for the past 14 months ended February 2024. Acuité believes that the working capital operations are likely to remain same in near to medium term. Moderate Financial Risk Profile Financial risk profile of the company stood moderate marked by moderate net worth, leverage and debt protection metrics. Tangible net worth of the company stood at Rs.33.43 Cr. as on 31st March 2024 (Prov.) as against Rs. 39.08 Cr. in FY 2023. The decline in net worth is due to decrease in reserves on an account of losses booked by company in FY24 which stood at Rs. (5.65) Cr. The Total debt of CGL stood at Rs.83.97 Cr in FY 2024 (Prov.) consists of Rs. 27.20 Cr. of long term borrowings, Rs. 28.94 Cr. of unsecured loans, Rs. 19.98 Cr. of working capital borrowings and Rs. 7.85 Cr. of CPLTD. Gearing (Debt to Equity) moderated to 2.51 times in FY 2024 (Prov.) from 2.35 times in FY 2023 due to losses booked by the company in the same year which impacted the reserves of the company. Further, the financial risk profile of the company deteriorated sharply as suggested by coverage indicators i.e. interest coverage ratio (ICR) which declined in FY 2024 (Prov.) and stood at 1.31 times against 3.44 times in FY 2023 and debt service coverage ratio (DSCR) went down below unity and stood at 0.53 times in FY 2024 (Prov.) as against 1.13 times in FY 2023. The net cash accruals to total debt (NCA/TD) stood low at 0.02 times in FY 2024 (Prov.) against 0.11 times in FY 2023 and Debt-EBITDA increased sharply from 4.5 times in FY 2023 to 9.36 times in FY 2024 (Prov.). Intense competition and vulnerability to cyclicality in end-user industry The ceramic tiles industry is intensely competitive, with many small and large players. Additionally, the industry is fragmented and dominated by the unorganised sector. Further, the company faces significant competition while selling its products under own brand from reputed players such as Kajaria Ceramics Ltd, Somany Ceramic Limited, H&R Johnson (India) (a division of Prism Cement Ltd) and Orient Bell Ltd. The competition, intensified in the past because of significant capacity addition by various manufacturers and moderation in demand which happens with cyclicality in the real estate sector, which pressurised the overall tile realisation of the company in the past. The intensity of the competition restricts the profitability, due to the limited pricing flexibility. |
| Rating Sensitivities |
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| Liquidity Position |
| Poor |
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The liquidity profile of the company is poor marked by insufficient net cash accrual which stood at Rs.2.06 Cr. against maturing debt obligation of Rs.9.98 Cr. Further, the company has infused approximately Rs2.00 Crore in the form of unsecured loans. However, the balance was paid off by stretching creditors in FY24 which stood at Rs.33.09 Crore against Rs.26.91 Crore. Going forward, company is expected to generate NCA of around Rs. 14 Cr. against maturing debt obligation which fall under the range of Rs.8 Cr approximately in near to medium term. The current ratio stood low at 0.93 times as on 31st March 2024 (Prov.) against 1.01 times on 31st March 2023. Further, the cash and bank balance available with the company stood at Rs. 0.43 Cr. and Bank limit utilization has consistently remained high wherein average utilization has remained at 99.31% in the last 14 months ended February 2024. Acuité believes that going forward the company may generate sufficient NCA to repay debt obligations in near to medium term however the liquidity position of the company will remain stretched.
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| Outlook: Stable |
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Acuité believes that the outlook of the company will remain 'Stable' over the medium term backed by its diversified promoter experience and moderate financial risk profile. The outlook may be revised to ‘Positive’ if the company register a higher growth in revenues while improving its operating profitability. Conversely, the rating can be downgraded in case of significant dip in revenue or deterioration in the working capital management resulting into further stress on liquidity profile of the company.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 111.94 | 129.75 |
| PAT | Rs. Cr. | (5.65) | 3.75 |
| PAT Margin | (%) | (5.05) | 2.89 |
| Total Debt/Tangible Net Worth | Times | 2.51 | 2.35 |
| PBDIT/Interest | Times | 1.31 | 3.44 |
| 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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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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