­Incorporated in 1981, Chandresh Cables Limited was established by Mr. Parasmal Jain, Mr. Tejraj Jain and Mr. Pukhraj Bafna. The company is engaged in the manufacturing and trading of cables and wires. The company is based in Gujarat. The installed capacity stands at 30000 km per annum for low tension wires and household cables while it is 10 km per day for high tension wires. The company is ISO 9001:2008 certified and sells its products under the ‘Avocab’ brand name. Besides this, the company is also into the generation of wind power.

Acuité has taken the standalone view of the business and financial risk profile of CCL to arrive at the rating.

• ­Ability to improve the scale of operations while maintaining the profitability margins

• Ability to improve and maintain an efficient working capital cycle

CCL has an adequate liquidity position marked by sufficient net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs.37.84 crore in FY24(Prov.) compared against Rs.3.38 crore maturing debt obligation over the same period. The company maintained unencumbered cash and bank balances of Rs.0.02 crore as on March 31, 2024(Prov.). The current ratio stood at 1.45 times as on March 31, 2024(Prov.). The working capital operations of the company are moderately intensive in nature with GCA days of 114 days in FY2024(Prov) with moderate reliance on working capital limits.

Going ahead, liquidity position is expected to remain adequate on account of generation of sufficient cash accruals for repayment of its debt obligations.

Acuité believes that CCL will continue to maintain a stable outlook over the medium term owing to its established presence in the cables and wires industry and association with a reputed customer base. The outlook may be revised to ‘Positive’ in case of higher than expected increase in scale of operations while maintaining the profitability margins, capital structure, improving the coverage indicators and working capital management. Conversely, the outlook may be revised to ‘Negative’ if the company registers lower than expected scale of operations and profitability or if the financial risk profile deteriorates owing to higher than-expected increase in debt levels due to increased  working capital requirements.

­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.