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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 69.00 | ACUITE BBB+ | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 210.00 | - | ACUITE A2 | Reaffirmed & Withdrawn |
| Bank Loan Ratings | 140.00 | - | Not Applicable | Withdrawn |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 419.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and withdrawn its long-term rating of ‘ACUITE BBB+’ (read as ACUITE triple B plus) and the short-term rating to ‘ACUITE A2’ (read as ACUITE A two) on the Rs.279.00 Cr. bank facilities of Goa Carbon Limited (GCL).
Acuite has also withdrawn the short term rating on the Rs 140.00 Cr Proposed Bank Facilities of GCL. The withdraw is on account of the request received from the company and NOC received from the banker, as per Acuite's policy of withdrawal of ratings. Rating for reaffirmation The rating continues to draw comfort from extensive experience of the promoters, long track record of company operations, and sequential improvement in the business risk profile on the back of structural changes in the end user industry. The rating further considers healthy networth, and healthy coverage indicators of GCL. The rating is however constrained on account of susceptibility of revenues to fluctuation in raw material prices. Further the rating also imparts a negative bias on account of customer concentration risk. |
| About the Company |
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Goa Carbon Limited (GCL) was incorporated in 1967 with its registered office at Dempo House, Campal, Panaji-Goa. GCL is engaged in manufacturing and marketing Calcined Petroleum Coke (CPC). It has manufacturing facilities located in Goa, Bilaspur and Paradeep with combined capacity of 308,000 metric tonnes per annum. Mr. Shrinivas V Dempo is the chairman of the company. GCL is a part of Dempo Group which has an established presence in Iron Ore mining and exports, Construction, Publishing, Ship Building, Travel and Trade etc.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of the company, for arriving at this rating.
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Key Rating Drivers
| Strengths |
| Extensive experience, reputed clientele and established track record of operations in the CPC segment
GCL is a part of Dempo Group, which was established in 1941. The group has diversified operations with a presence in Iron Ore mining and exports, Construction, Publishing, Ship Building, Travel and Trade, among others. GCL has more than five decades of track record in the production of CPC and hence has an established market position amongst the leading producers of CPC in India. The chairman of the company, Mr. Shrinivas Dempo has an extensive experience of over three decades in the industry. GCL caters to reputed companies among the Aluminium Industry, Graphite Industry and Steel Industry which includes Hindalco Industries Limited (HIL), Vedanta Aluminium Limited (VAL), The Kerala Minerals and Metals Limited (KMML), Steel Authority of India Ltd (SAIL) to name a few. GCL has also healthy relations developed over a decade with the various global raw material suppliers such as Kuwait Petroleum Corporation, Oxbow Carbon & Minerals LLC, Mitsubishi Corporation Limited among others. Acuité believes that the established position in the industry and healthy relations with both customers as well as suppliers will help the company to maintain a stable business profile in the CPC segment. Improvement in business risk profile The business risk profile of the company witnessed improvement reflected by growth in revenues during FY2023 and 9MFY2024. The revenue from operations of GCL improved to Rs. 1364.36 Cr. in FY2023 against Rs. 766.12 Cr. in FY2022. Further, the revenues during 9MFY2024 stood in similar range at Rs. 606.42 Cr. The surge in the demand of aluminium while tightening of its supply marked by geo-political issues and consequent sanctions on Russia, which contributes almost 6 percent of the global aluminium supply, has resulted in an implicit effect on the pricing of CPC. The average selling price of the CPC during FY20-21 stood at around Rs. 22,000 per metric tonne which grew to Rs. 42,000 per metric tonne in FY21-22, while as on 9MFY23 the average selling price stood as high as Rs.77,000 per metric tonne. Acuité believes that GCL’s operating performance is susceptible to the changes in pricing of CPC and the same will remain critical for its future growth. |
| Weaknesses |
| Profitability susceptible to price volatility and cyclicality of the industry
Calcined Petroleum Coke (CPC) is produced from “green” petroleum coke, which is a byproduct of oil refining. CPC is extensively used to make anodes for the aluminium, steel and titanium smelting industry. The company performance remains vulnerable to cyclicality in the aluminium and steel sector as demand for the same depends on the performance of the end user segments such as electronics, aviation, real estate etc. Although the revenues have increased during FY2023 & FY2022, it is not a result of corresponding increased production levels. The actual capacities have remianed utilised at around 64 percent in FY2021, 59 percent during FY2022 while 55 percent during 9MFY2023. Further, the operating margins although improved have stood at 10.72% in FY2023 against 7.40% in FY2022 and 1.78% in FY2021.The operating performance of the company is exposed to fluctuations in the prices of raw materials as well as realization from finished goods. Exposure to customer concentration risk GCL's customer base is heavily dominated by Hindalco Industries Limited (HIL) and Vedanta Aluminium & Power Limited (VAPL) which together account for more than 90 percent of the total revenues. However, HIL and VAPL being leading aluminium producers the risk is mitigated to quite some extent. Acuité believes that the ability of the company to expand its customer base in order to further mitigate the risk will be critical. |
| Rating Sensitivities |
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| All Covenants |
| Not Applicable. |
| Liquidity Position |
| Adequate |
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GCL’s liquidity is adequate. The cash accruals stood at Rs. 82.76 Cr. in FY2023 against Rs.39.88 Cr. in FY2022. while there have no major debt obligations within the period as the long-term loan of Rs. 9 Cr. carries a moratorium of around 2 years and repayment to start from FY2024. The company majorly works on LCs and Buyer’s Credit. However, GCL keeps major cash balances as margin money with the bank to raise additional LC/BG limits. Acuite` believes that the ability of the company to manage its liquidity, so as to ensuring timely retirement of LC will be critical.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| Not Applicable. |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 1364.36 | 766.12 |
| PAT | Rs. Cr. | 80.59 | 37.78 |
| PAT Margin | (%) | 5.91 | 4.93 |
| Total Debt/Tangible Net Worth | Times | 2.27 | 2.09 |
| PBDIT/Interest | Times | 3.38 | 3.65 |
| 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 • Entities In Manufacturing Sector:- 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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