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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 6.10 | ACUITE BB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 7.00 | - | ACUITE A4+ | Reaffirmed |
| Total Outstanding Quantum (Rs. Cr) | 13.10 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) and short-term rating of ‘ACUITE A4+’ (read as ACUITE A four plus) on the Rs.13.10 crore bank facilities of GALAXY ALUMINIUM LLP (GAL). The outlook is 'Stable'.
Rational for Rating The rating is reaffirmed taking into consideration the Group’s operating and financial performance since the last review. The operating income of the group stood at Rs.118.52 Cr in FY2022 (Prov.) as against Rs.137.12 Cr in FY2021 and Rs.197.43 Cr in FY2020. The operating margins ranged between 2.85 to 5.20 percent in the last three years ended FY2022. The rating derives comfort from the established track record of operations, experienced management and moderate financial risk profile of the Group. These strengths are however, partially offset by the working capital intensive nature of operations and highly competitive and fragment nature of the industry. |
| About Company |
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Galaxy Aluminum LLP is a Sangli-Maharashtra based firm, established in the year 2011. The firm is promoted by Mr. Subhash Vrajlal Vhora, Mr. Sameer Subhash Vhora and other family members. The firm is engaged as a rolling mill and has a capacity of manufacturing 20,000 MTPA of aluminum and aluminum alloys rods. The product manufactured by the firm is used as a backward integration for manufacturing aluminum conductors under the company-Galaxy Transmission Private Limited. The firm meets most of the aluminum alloy rod requirement of GTPL.
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| About the Group |
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Galaxy Group is a Maharashtra based group founded in the year 1995. The group is promoted by the Vhora family led by Mr. Subhash Vrajlal Vhora and Mr. Sameer Subhash Vhora. The group comprises of two companies, namely Galaxy Aluminium LLP (GAL) and Galaxy Transmission Private Limited (GTPL). GTPL (erstwhile Galaxy cables) was established in the year 1995 and later in the year 2006, the constitution was changed to a private limited company. The group is engaged in manufacturing aluminum and aluminum alloy rods and conductors. GAL is engaged in manufacturing aluminum and aluminum alloy rods whereas GTPL is engaged in manufacturing aluminum conductors that finds its use in power transmission and distribution industry. The manufacturing units are located at Sangli and Nagpur unit. The total manufacturing capacity is ~65,000 MTPA for conductors with ~65 per cent utilization. The group supplies products to Scottish chemical Industries, Zoya Enterprises and many other Private Utilities. GAL meets most of the aluminum alloy rod requirement of GTPL with manufacturing capacity of 20,000 MTPA for aluminum and aluminum alloy rods.
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Analytical Approach
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profiles of Galaxy Aluminium LLP (GAL) and Galaxy Transmissions Private Limited (GTPL), together referred to as the ‘Galaxy Group’ (GG), to arrive at the rating. The consolidation is in view of the common promoters and operational and financial linkages between the entities.
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Key Rating Drivers
| Strengths |
| > Established track record of operations and experienced management
The group was founded in 1995 by Mr. Subhash V. Vhora along with his family members.Thus, the group has an operational track record of over two decades in the aluminium products industry. Mr. Subhash V. Vhora along with his son Mr. Sameer Vora are involved in the day-to-day operations of the group and are ably supported a team of mid-level managers. The long track record of operations and experience of the management has helped the group develop healthy relationships with its customers and suppliers. Acuité believes that the group will sustain its existing business profile on the back of established track record of operations and experienced management. >Moderate Financial Risk Profile The financial risk profile of the group is moderate marked by moderate net worth, low gearing and above average debt protection metrics. The tangible net worth stood at Rs.41.59 crore as on 31 March, 2022 (Prov) as against Rs.40.48 crore as on 31 March, 2021 and Rs.40.66 crore as on 31 March, 2020. The total debt of the Group stood at Rs.21.11 crore as on March 31, 2022 (Prov.) and includes Rs.7.43 crore of long-term debt and Rs.13.67 crore of short-term debt. The gearing (debt- equity) stood at 0.51 times as on 31 March, 2022 (Prov) as compared to 0.41 times as on 31 March, 2021 and 0.63 times as on 31 March, 2020. Interest Coverage Ratio stood at 1.96 times for FY2022 (Prov) as against 1.69 times for FY2021 and 2.13 times for FY2020. Debt Service Coverage Ratio (DSCR) stood at 1.93 times in FY2022 (Prov) as against 1.68 times in FY2021 and 1.88 times in FY2020. Total outside Liabilities/Total Net Worth (TOL/TNW) stood at 1.03 times as on 31 March, 2022 (Prov) as against 0.97 times as on 31 March, 2021 and 1.40 times as on 31 March, 2020. Net Cash Accruals to Total Debt (NCA/TD) stood at 0.12 times for FY2022 (Prov). Acuité believes that in the absence of any debt funded capex plan, the financial risk profile of the group is expected to remain moderate over the medium term. |
| Weaknesses |
| > Working capital intensive nature of operations
The working capital nature of operations of the Group is intensive in nature, marked by GCA days of 186 days in FY2022 (Prov) as against 149 days in FY2021 and 127 days in FY2020. The debtor days stood at 90 days in FY2022 (Prov) as against 55 days in FY2021. The average credit period allowed to customers is 40-45 days. The Group’s operations were significantly impacted due to Covid-19 (second wave) during FY2022 and surge in aluminium prices. The operations have shown robust recovery since then, marked by the improving trend in revenues month-on-month. Further, the debtors ageing of the Group as on March 31, 2022 shows that more than 95% of debtors are recoverable within 90 days. The creditor days stood at 29 days in FY2022 (Prov) as against 37 days in FY2021. The average credit period allowed by its suppliers is ~40-45 days for GTPL and for GALLP, procurement is done largely on advance payment basis. The inventory days stood at 68 days in FY2022 (Prov) as against 47 days in FY2021. The average bank limit utilisation of GALLP is around ~72.78%. Acuite expects the working capital management to remain intensive over the medium term on account of high debtor collection and inventory holding period. >Highly competitive and fragmented industry The Galaxy Group operates in a highly fragmented and competitive industry with limited entry barriers, wherein the presence of large number of players in the unorganised sector limits its bargaining power with customers. |
| Rating Sensitivities |
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| Material Covenants |
| None. |
| Liquidity Position: Adequate |
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The Group’s liquidity position is adequate marked by moderate net cash accruals against its maturing debt obligations. The Group has net cash accruals in the range of Rs.1.89-Rs.4.20 Crore from FY 2020- 2022 against its maturing debt obligations in the range of Rs.1.86 crore in the same tenure. The Group is expected to generate net cash accruals in the range of Rs.9.35-Rs.12.9 crores against the maturing repayment obligations of around Rs.3.11 crore over the medium term. The working capital management of the group is intensive marked by GCA days of 186 days in FY2022 (Prov) as against 149 days in FY2021. The Group maintains unencumbered cash and bank balances of Rs.4.63 crore as on March 31, 2022 (Prov). The current ratio stands at 1.82 times as on March 31, 2022 (Prov). The average bank limit utilization for the past 06 months June 2022 is ~ 72.78 percent.
Acuité believes that the liquidity of the group is likely to remain adequate over the medium term on account of moderate cash accrual against its maturing repayment obligations over the medium term. |
| Outlook: Stable |
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Acuité believes that the group will maintain a 'Stable' outlook over the medium term on the back of its established track record of operations, experienced management and moderate financial risk profile. The outlook maybe revised to 'Positive' in case the group registers higher-than-expected growth in its revenues and profitability, while maintaining its liquidity position. Conversely, the outlook may be revised to 'Negative' in case the group registers lower-than-expected growth in revenues and profitability or in case of deterioration in the group's financial risk profile or significant elongation in working capital cycle.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 118.52 | 137.12 |
| PAT | Rs. Cr. | 1.14 | 0.59 |
| PAT Margin | (%) | 0.96 | 0.43 |
| Total Debt/Tangible Net Worth | Times | 0.51 | 0.41 |
| PBDIT/Interest | Times | 1.96 | 1.69 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any Other Information |
| None. |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on Complexity Levels of the Rated Instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
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