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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 75.00 | - | ACUITE A4 | Reaffirmed |
| Total Outstanding | 75.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the short term rating of 'ACUITE A4' (read as ACUITE A four) on the Rs.75.00 Crores bank facilities of Hazel Infra Limited (HIL).
Rationale for rating recommendation The rating reflects HIL's acquisition of Reliance Naval and Engineering Limited (RNAVAL) under the resolution plan. HIL will support in reviving the manufacturing of defence ships, ship repairs, ship recycling that forms the core business of RNAVAL. The rating is however constrained by the nascent stage of current operations in the revival plan and the regulatory risk surrounding the work sphere of RNAVAL. |
| About the Company |
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Mumbai based Hazel Infra Limited was incorporated in 2008 and is engaged in the business of building warships etc. The directors of the company include Mr. Nitinkumar Dindayal Didwania, Mr. Chetan Kanaiyalal Selarka, Mr. BHAVIK Nikhil Merchant and Mr. Vivek Paresh Merchant. HIL is an SPV of Swan Energy Limited and Hazel Mercantile Limited, wherein, Swan Energy Limited holds 74% of the equity stake and Hazel Mercantile Limited holds 26% equity stake in HIL. Mumbai Swan Energy Limited (SEL) was incorporated in the year 1909 as Swan Mills Limited by J.P. Goenka Group and taken over by Dave and Merchant families in 1992 and Hazel Mercantile Limited was incorporated in 1995 and is currently managed by Mr. Nitinkumar Dindayal Didwania. The company is engaged in trading & distribution of chemicals.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuite has considered the standalone business and financial risk profile of Hazel Infra Limited to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Niche area of operations & In-principle agreement with Naval Engineering Services (NES)
HIL has acquired RNAVAL and has entered into an in-principle agreement with NES for the manufacturing of the ships and submarines. RNAVAL is engaged in the manufacturing of defence ships and submarines along with ancillary activities such as ship repairs, ship recycling and is the first company in the private sector to be engaged in defence shipbuilding in India, thus awarding it a competitive edge over the other probable entrants. Further, NES is a highly reputed company with requisite experience and strength in the field of design, construction, repair, modernisation / refurbishment of full range of conventional and strategic naval assets including ships and submarines for Navy & Coast Guard. |
| Weaknesses |
| Nascent stage of operations
HIL's acquisition of RNAVAL under the resolution plan is towards revival of operations of RNAVAL. However, the operations are at a nascent stage, where, HIL is in the process of reviving the operations of RNAVAL. The operations have yet not started and are expected to begin by Q3 FY25. Acuité believes that the ability of HIL to ensure revival of RNAVAL within the expected timeline will remain a key rating sensitivity. Exposure to Regulatory Risk Indian defence industry is a highly government regulated industry. There have been continuous regulatory changes in terms of the government's policies towards manufacturing defence assets. The industry is expected to remain highly regulated by the government going forward, exposing the business risk profile to adverse regulatory changes. Acuité believes that any government regulation could have significant impact on the operating income and profitability of the company. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate marked by adequate cash accruals to its maturing debt obligations. The company has generated net cash accruals of Rs.0.07 Cr. as on 31st March 2024 (Prov.) against no debt repayment obligation over the same period. Going forward, the company is expected to generate net cash accruals under the range of Rs.0.11 to Rs.0.14 Cr. against no debt repayment obligations over the same period. The current ratio of the company stood at 11.51 times as on 31st March 2024(Prov.) against 0.87 times as on 31st March 2023. Further, the cash and bank balance available with the company stood at Rs.0.28 Cr. as on 31st March 2024 (Prov.). Acuité believes that going forward the company will maintain adequate liquidity position due to steady accruals.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 0.00 | 0.00 |
| PAT | Rs. Cr. | 0.07 | 0.14 |
| PAT Margin | (%) | 0.00 | 0.00 |
| Total Debt/Tangible Net Worth | Times | 0.76 | 75.57 |
| PBDIT/Interest | Times | 2.65 | 1915.00 |
| 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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