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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 78.00 | ACUITE A | Stable | Reaffirmed | - |
| Total Outstanding | 78.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE A’ (read as ACUITE A) on the Rs 78.00 Cr. bank facilities of Fine Components and Tools Private Limited (FCTPL). The outlook is 'Stable'.
Ratioanle for reaffirmation: The rating reaffirmation considers FCTPL’s improvement in operational performance during FY2024 and the same being sustained during the first 6 months of FY2025. The operating margins ranged between 14.12-14.63 percent for the last two years ending in FY2024. The financial risk profile of FCTPL continues to be healthy with comfortable debt protection metrics and low gearing. Further, the rating continues to derive strength from the company's long-term presence in the market for more than two and a half decades and its established relations with the customers, which fetch repeated orders. FCTPL’s major customers include companies like Toyota Boshoku Automotive India Private Limited, Autoliv Safety System India Private Limited, Maruti Suzuki India Limited, Tokai Rubber Auto Parts India Private Limited, Denso Kirloskar India Private Limited, etc. However, the rating is constrained by the competitive nature of auto ancillary industry and the susceptibility to the cyclicality in automotive industry. |
| About the Company |
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Fine Components and Tools Private Limited was established in 1994, based out of Bangalore, as a proprietorship concern, and subsequently the constitution changed to a private limited company in 1997. The company is promoted by Mr. C. Krishna Moorthy. FCTPL is engaged in the manufacturing of sheet metal stamping parts and assemblies. These include parts of seat belt frames, seat rails & side frames, buckle straps, seat folding hinges, airbag containers, airbag retainer rings, armrests, axle housings, etc. FCTPL has five manufacturing units and has installed capacity to process 3,500 metric tons of steel quantity per month and process 2,400-2,500 MT of steel every month. Major customers include companies like Toyota Boshoku Automotive India Private Limited, Autoliv Safety System India Private Limited, Tokai Rubber Auto Parts India Private Limited, Toyota Kirloskar Motors Private Limited, Toyotetsu India Auto Parts Private Limited, Maruti Suzuki India Limited, Rane TRW Steering Systems Private Limited, and Denso Kirloskar India Private Limited, etc.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of FCTPL to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
FCTPL was established in 1994, based out of Bangalore, as a proprietorship concern, and subsequently the constitution changed to a private limited company in 1997. The company is promoted by Mr. C. Krishnamoorthy. The promoters have more than two decades of experience in the automobile ancillary business and are well supported by a second line of management comprising Mr. Gopinath Krishnamoorthy and Mrs. Krishnamoorthy Kavitha. The promoter’s extensive experience has helped the company to establish a healthy relationship with the reputed customers and suppliers. FCTPL’s major customers include companies like Toyota Boshoku Automotive India Private Limited, Autoliv Safety System India Private Limited, Tokai Rubber Auto Parts India Private Limited, Maruti Suzuki India Limited, and Denso Kirloskar India Private Limited, etc. Acuité believes having a stable clientele will provide strong revenue visibility in the short to medium term.
The company has reported significant improvement with YOY growth of 29.77 percent in FY2024 as compared to FY2023. Revenues stood at Rs.532.23 Cr. in FY2024 as against Rs.410.13 Cr. in FY2023. The reason for improvement in the revenue is on account of increased demand in the automotive industry and utilization of additional capacity. In the current fiscal year, the company has achieved revenues worth Rs.282.79 Cr. till Sep 2024 and is projecting revenues of around Rs.570-575 Cr. for FY2025. Margins are expected to be at similar levels to FY2024. Further, the operating margin was in the range of 14.63 percent to 14.12 percent over the past two years ending in FY2024. Acuité believes the revenue and operating margins to be fairly stable in the short term, improving marginally over the medium term in line with the performance of the automotive industry.
The company’s financial risk profile is healthy, marked by a healthy capital structure, minuscule gearing, and healthy debt protection metrics. The net worth of the company stood at Rs. 167.01 Cr. and Rs. 117.23 Cr. as on March 31, 2024, and 2023, respectively. The improvement in net worth is due to the accretion of reserves. Gearing of the company stood at 0.11 times as on March 31, 2024, against 0.24 times as on March 31, 2023. The improvement in gearing is on account of minimal utilization in short-term debt levels. Debt protection metrics—interest coverage ratio and debt service coverage ratio—stood healthy at 13.95 times and 5.06 times as on March 31, 2024, respectively, as against 10.76 times and 3.77 times as on March 31, 2023, respectively. TOL/TNW (total outside liabilities/total net worth) stood at 0.57 times and 0.79 times as on March 31, 2024, and 2023, respectively. The debt to EBITDA of the company stood high at 0.20 times as on March 31, 2024, as against 0.48 times as on March 31, 2023. Acuité believes that the financial risk profile is expected to be at similar levels over the medium term, considering no debt-funded expansion is planned in the near future.
FCTPL’s working capital operations remained efficient, marked by efficient gross current asset (GCA) at 62 days in FY2024 as against 63 days in FY2023. The GCA days are efficient on account of efficiently managing the receivable cycle and inventory days. Inventory days stood at 7 days in FY2024 as against 6 days in FY2023. Debtor days stood at 37 days in FY2024 as against 47 days in FY2023. Further, the average bank limit utilization for the fund-based limits stood at 23 percent for the last six months ending in November 2024. Subsequently, the payable period stood at 46 days in FY2024 as against 56 days in FY2023. Acuité believes that the efficient working capital management will be crucial to the FCTPL in order to maintain a stable credit profile.
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| Weaknesses |
FCTPL is present in the highly competitive auto ancillary business, which has a large number of small and large players who have a varied appetite for technology. The majority of the high-margin and technology-intensive works are picked up by larger players who can set aside funds for research and development. The less technologically intensive and production activities are passed on to smaller players in the market. The automobile industry is highly cyclical, with demand moving with larger economic cycles, customer preferences, government policies, etc. FCTPL has a limited bargaining power with its customers and faces customer concentration risk, as more than 62 percent of the revenue is derived from four top customers. We believe that FCTPL will continue to remain exposed to the volatility in demand for the products and dependency on OEMs.
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| Rating Sensitivities |
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| Liquidity Position: Adequate |
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FCTPL liquidity is adequate, marked by adequate net cash accruals to its maturing debt obligation. The company has generated cash accruals in the range of Rs. 65.91 Cr. in FY2024, while its maturing debt obligations were Rs. 7.90 Cr. during the same period. Going forward, the company is expected to generate net cash accruals of Rs. 55-65 Cr. in FY 2025-26 against Rs. 7.93-6.78 Cr. debt obligations. The current ratio stood at 1.55 times as of March 31, 2024. Further, the average bank limit utilization for the fund-based limits stood at 23 percent for the last six months ending in November, 2024. The company maintains unencumbered cash and bank balances of Rs. 13.62 Cr. as on March 31, 2024. Acuité believes that the liquidity of the company is likely to improve over the medium term.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 532.23 | 410.13 |
| PAT | Rs. Cr. | 49.93 | 29.36 |
| PAT Margin | (%) | 9.38 | 7.16 |
| Total Debt/Tangible Net Worth | Times | 0.11 | 0.24 |
| PBDIT/Interest | Times | 13.95 | 10.76 |
| 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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