Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 12.50 ACUITE BB- | Stable | Reaffirmed -
Bank Loan Ratings 0.50 - ACUITE A4+ | Reaffirmed
Total Outstanding 13.00 - -
Total Withdrawn 0.00 - -
 
Rating Rationale

­Acuité has reaffirmed its long-term rating at ‘ACUITE BB-’ (read as ACUITE double B minus) and short-term rating at 'ACUITE A4+'(read as ACUITE A four plus) on the Rs. 13.00 Cr bank facilities of Jaycee Steels Private Limited (JSPL). The outlook is 'Stable'. The rating has been migrated to Regular rating from 'Issuer non-cooperating'.

Rationale for rating reaffirmation
The rating reaffirmation factors in the company’s established track record of operations of over three decades in the industry and long-standing experience of its management. The rating also factors in the moderate scale of operations which marginally increased to Rs. 32.12 Cr in FY2024 as against Rs. 31.43 Cr in FY2023. In H1FY25 the company reported revenues of ~ Rs. 16.08 Cr as against Rs. 16.49 Cr. in H1FY24. However, the operating profitability margin declined to 7.31% in FY2024 from 8.70 % in FY2023, primarily due to increase in employee cost. Further, the rating is constrained by the below average financial risk profile, intensive nature of working capital operations and stretched liquidity position.
Going ahead, the ability of the company to maintain steady growth in revenue, while maintaining profitability margins and improving its financial risk profile on the back of steady accruals generation will remain key monitorable.

 

About the Company
­­Incorporated in 1986, Jaycee Steels Private Limited (JSPL) is based in Ghaziabad and is engaged in in the manufacturing of auto parts (cylinder blocks, spare parts, piston, piston rings, etc.) for two- wheeler and three-wheeler vehicles and parts for the industrial machinery. Mr. Brij Mohan Sachdeva & Mr. Varun Sachdeva are the directors of the company. The manufacturing plant of the company is located in Ghaziabad, Uttar Pradesh. The company sells its products to automobile component manufacturers, industrial machinery manufacturers and also in the local replacement markets in Uttar Pradesh and nearby states.
 
Unsupported Rating
­Not Applicable
 
Analytical Approach
­Acuité has considered the standalone business and financial risk profile of JSPL to arrive at the rating.
 
Key Rating Drivers

Strengths
­Established track record of operations and experienced management
JSPL was incorporated in 1986, the company has an operational track record of around three decades in automotive industry. Mr. Brij Mohan Sachdeva (Director) and Mrs. Shakti Sachdeva (Director) have an experience of over three decades in the aforementioned line of business. The long track record of operations and experience of management has helped the company develop healthy relationships with its customers and suppliers. Acuité believes that JSPL will sustain its existing business profile on the back of an established track record of operations and experienced management.

Weaknesses
­Below average financial risk profile
The financial risk profile of the company is below average, marked by low net worth, high gearing, and below average debt protection indicators. The tangible net worth of the company increased to Rs. 6.54 Cr as on March 31,2024 from Rs. 6.36 Cr as on March 31,2023 due to accretion of profits to reserves. The total debt of the company stood at Rs. 25.81 Cr.as on March 31, 2024, as against Rs. 24.28 Cr as on March 31, 2023. The debt profile of the company comprises of Rs. 6.36 Cr. of long-term debt, Rs. 12.35 Cr. of short-term debt and Rs. 7.10 Cr of USL. The gearing of the company stood high at 3.95 times as on March 31,2024 as compared to 3.81 times as on March 31,2023. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) of the company stood at 5.00 times as on March 31,2024 as against 5.24 times as on March 31, 2023. Further, the debt protection metrics of the company stood below average reflected by debt service coverage ratio of 1.11 times for FY2024 as against 0.76 times for FY2023. The interest coverage ratio stood at 1.42 times for FY24 as against 1.34 times for FY23. The net cash accruals to total debt (NCA/TD) stood at 0.03 times as on March 31,2024 as compared to 0.02 times in the previous year.
Going ahead, the financial risk profile is expected to improve on account of steady accruals generation and in absence any further major debt funded capex over the medium term.


Intensive nature of working capital operations
The working capital operations of the company is intensive in nature, marked by high GCA of 280 days in FY2024 as against 302 days in FY2023. The high GCA days are primarily on account of elevated inventory levels, high debtor days and other current assets, mainly comprising of balances with government authorities and security deposits. The inventory holding period stood at 216 days in FY2024 as compared to 223 days In FY2023. The debtor days stood at 62 days in FY2024 compared to 79 days in FY2023. The average credit period allowed is between 60 and 75 days, with some customers making advance payments. The company also derives support from its creditors. The creditor days stood at 79 days in FY2024 as against 112 days in FY2023. The usual credit allowed by the suppliers is up to 90 days. Furthermore, the average utilization for fund-based limits remained high, averaging around 94.71% over the last 13 months ending Sep 2024.
Going ahead, the ability of the company to manage its working capital operations efficiently will remain a key monitorable.
 
Rating Sensitivities
  • Sustained improvement in scale of operations while maintaining profitability.­
  • Significant improvement in its working capital management.
  • Improvement in profitability levels, thereby impacting company’s debt coverage indicators.
 
Liquidity Position
Stretched
The company has stretched liquidity profile marked by a limited cushion in net cash accruals to its maturing debt obligations. The company generated cash accruals of Rs. 0.89 Cr for FY2024 as against maturing debt obligations of around Rs. 0.61 Cr in the same tenure. In addition, it is expected to generate cash accrual in the range of Rs. 0.82 – 1.11 Cr as against its maturing repayment obligations in the range of Rs. 0.61- 0.43 Cr over the medium term. The cash and bank balances of the company stood at Rs. 0.06 Cr as on March 31, 2024. Further, the working capital management of the company remained intensive marked by GCA days of 280 days as on 31st March 2024 along with high reliance on working capital limits with average utilisation of fund-based limits at ~94.71% over the past thirteen months ending Sep 2024. The current ratio stands average at 1.26 times as on 31st March 2024 as against 1.29 times as on 31st March 2023.
Acuite believes that going forward, the liquidity position of the company is expected to remain stretched on account of expected modest accruals generation against its maturing repayment obligations in the near to medium term and limited buffer available from the working capital limits.
 
 
Outlook: Stable
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 24 (Actual) FY 23 (Actual)
Operating Income Rs. Cr. 32.12 31.43
PAT Rs. Cr. 0.18 0.04
PAT Margin (%) 0.55 0.14
Total Debt/Tangible Net Worth Times 3.95 3.81
PBDIT/Interest Times 1.42 1.34
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Any other information
­None
 
Applicable Criteria
• 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

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
30 Aug 2023 Bank Guarantee (BLR) Short Term 0.50 ACUITE A4+ (Reaffirmed & Issuer not co-operating*)
Term Loan Long Term 0.25 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Cash Credit Long Term 10.00 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Working Capital Demand Loan (WCDL) Long Term 1.25 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Proposed Long Term Bank Facility Long Term 1.00 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
09 Jun 2022 Bank Guarantee/Letter of Guarantee Short Term 0.50 ACUITE A4+ (Reaffirmed & Issuer not co-operating*)
Term Loan Long Term 0.25 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Cash Credit Long Term 10.00 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Working Capital Demand Loan (WCDL) Long Term 1.25 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
Proposed Long Term Bank Facility Long Term 1.00 ACUITE BB- (Reaffirmed & Issuer not co-operating*)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)		 Complexity Level Rating
Indian Bank Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.50 Simple ACUITE A4+ | Reaffirmed
ICICI Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 11.25 Simple ACUITE BB- | Stable | Reaffirmed
Indian Bank Not avl. / Not appl. Working Capital Demand Loan (WCDL) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 1.25 Simple ACUITE BB- | Stable | Reaffirmed

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