Press Release

Press Release

February 16, 2024

J C GRAPHICS PRIVATE LIMITED
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	36.40	ACUITE BB- \| Stable \| Assigned	-
Bank Loan Ratings	8.60	-	ACUITE A4 \| Assigned
Total Outstanding	45.00	-	-

Rating Rationale

Acuité has assigned its long-term rating of ‘ACUITE BB-’ (read as ACUITE double B minus) and short term rating of ‘ACUITE A4’ (read as ACUITE A four) to the Rs. 45 Cr bank facilities of J C Graphics Private Limited(JCGPL). The outlook is ‘Stable'.

Rationale for rating assigned
The rating assigned factors in the experience and long track record of operation of the company in high end printing and packaging industry. Further, it considers the company’s ability to receive recurring orders from reputed clientele like VST industries, ITC, JK Paper limited etc., and healthy order book position of Rs.25.73 Cr as on November 2023. However, rating is constrained by average financial risk profile, working capital intensive nature of operations and susceptibility of cyclicality in the plastic and end user industry.

About the Company

Based in Andhra Pradesh, J C Graphics Private Limited was incorporated in 1990. The company is engaged in manufacturing of packaging materials and printing of notebooks. It is directed by Mr. Heman Ratnakar Thyagaraj and Mr. Christopher Karunakar Thyagaraj.

Unsupported Rating

Not applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of JCGPL to arrive at the rating.

Key Rating Drivers

Strengths

Experienced management and long track record of operations
JC Graphics Private limited (JCGPL) has more than three decades of experience in printing and packaging business. The company is currently managed by Mr.Heman Ratnakar Thyagaraj and Mr. Christopher Karunakar Thyagaraj. The extensive experience of the promotors has helped the company establish long term relationship with its customers and suppliers for repeat orders. The company's clientele includes reputed players like VST, JK papers, ITC and Godrej industries. JCGPL serves clientele involved in varied industries thereby diversifying its customer concentration risk.
Acuite believes that JSGPL may continue to benefit from its experienced promotors and their long track record of operations in printing and packaging industry.

Healthy Order book backed by recurring orders from reputed clientele
JCGPL has been receiving recurring orders from its customers and maintained stable growth in its revenue, company's operational revenue stood at Rs.57.30 Cr in FY2023 as against Rs.50.87 Cr in FY22 and Rs.44.29 Cr in FY21. In current financial year FY24, company has recorded the revenue of Rs.35.79 Cr up to December 2023. JCGPL has been receiving repeated orders from the existing clientele on the back of its established track record and healthy relationship. Company has an unexecuted order book of ~Rs.25.73 Cr as on November'2023 to be executed by March 2024.
Acuite believes that scale of operations of the company may gradually improve backed by recurring orders from reputed clientele.

Weaknesses

Average financial risk profile
The financial risk profile of the company is average, marked by moderate net worth, high leverage ratios and below unity debt protection matrices. The company's net worth stood at Rs.21.28 Cr as on March 31st 2023 as against Rs.20.17 Cr as on March 31st 2022 and Rs.18.96 Cr as on March 31st 2021. The total debt of Rs.51.09 Cr as on March 31st 2023 consists of short term debt of Rs.31.72 Cr, long term debt of Rs.5.56 Cr, USL from promotor of Rs.9.18 Cr and current portion of long term debt (CPLTD) of Rs.4.63 Cr. The gearing ratio of the company improved moderately, however continued to remain high at 2.4 times as on March 31st 2023 as against 2.61 times as on March 31st 2022 and 3.09 times as on March 31st 2021. Further, the ratio of total outside liabilities to tangible net worth stood at 2.78 times as on March 31st 2023 as against 3.00 times as on Msrch 31st 2022 and 3.32 times as on March 31st 2021.
The debt protection matrices of debt service coverage ratio (DSCR) stood below unity at 0.89 times as on March 31st 2023, however, company was able to meet its debt obligations through reduction in debtors levels. Interest coverage ratio (ICR) stood at 1.77 times as on March 31st 2023 as against 1.70 times as on March 31st 2022 and 1.63 times as on March 31st 2021.
Acuite believes that improvement in financial risk profile of the company is a key rating sensitivity going forward.

Working capital intensive nature of operations
The operations of the company are working capital intensive marked by high Gross Current Asset(GCA) days of 366 days in FY2023 as against 408 days in FY2022 and 457 days in FY2021. GCA days are majorly dominated by inventory days and debtor days. Inventory days stood at 293 days in FY2023 as against 309 days in FY2022 and 352 days in FY2021. Debtor days also remained high at 114 days in FY2023 as against 147 days in FY2022 and 170 days in FY2021. Creditor days of the company stood low in the range of 7 to 12 days during last three years ending FY2023. Further, the average working capital utilisation of the company stood high at 96.46 percent over the past 12 months ending September'2023.
Acuite believes that improvement in working capital operations is a key rating sensitivity going forward.

Susceptibility to cyclicality in the printing industry and highly competetive industry
The domestic printing and packaging sector is characterised by demand cyclicality and volatility in raw material. Company operates in the cyclical printing and packaging industry thus making it vulnerable to downturns in industry demand, leading to decline in realizations and profitability. Company continues to face challenges from many unorganised player in the market and presence of high number of players further intensifies the competetion.

Rating Sensitivities

Significant improvement in scale of operations while maintaining profitability margins
Sustainable improvement in Profitability, Leverage and Solvency position of the group
Sustainable improvement in Gross current assets (GCA) days
Any further deterioration in working capital management leading to deterioration in financials risk profile and liquidity

Liquidity Position: Stretched

The liquidity position of the company is stretched marked by net cash accruals of Rs. 3.77 Cr in FY2023 as against repayment obligations of Rs.5.01 Cr in FY2023. Company was able to meet its debt obligations through reduction in debtor levels. Further, company has high reliance on the short term borrowing reflected through an average bank limit utilization of 96.46 percent over past 12 months ending September 2023. However, net cash accruals are expected to be in the range of Rs. 5 Cr to 6.3 Cr during FY25-FY26 against repayment obligations ranging between Rs.2.4 Cr to Rs.3.1 Cr during the same tenure. JCGPL’s current ratio stood at 1.37 times as on March FY2023 and has a cash and bank balance of Rs. 0.01 Cr as on 31st March 2023.

Outlook: Stable

Acuité believes that JCGPL will maintain ‘Stable’ outlook over the medium term due to extensive experience of its promoters, longstanding relationship with reputed clientele and moderate growth in revenue. However, the outlook may be revised to ‘Positive’ in case if the company registers expected or higher-than expected growth in revenues and profitability, overall improvement in financial risk profile and efficient working capital management. Conversely, the outlook may be revised to ‘negative’ in case of company’s inability to achieve the expected increase in revenue and profitability or deterioration in overall financial risk profile and working capital operations leading to further stretch in liquidity.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	57.30	50.87
PAT	Rs. Cr.	1.11	1.21
PAT Margin	(%)	1.94	2.38
Total Debt/Tangible Net Worth	Times	2.40	2.61
PBDIT/Interest	Times	1.77	1.70

Status of non-cooperation with previous CRA (if applicable)

None

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

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.

Rating History :

Not applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Punjab National Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	14.60	Simple	ACUITE BB- \| Stable \| Assigned
Union Bank of India	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	9.00	Simple	ACUITE BB- \| Stable \| Assigned
Union Bank of India	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	3.60	Simple	ACUITE A4 \| Assigned
Punjab National Bank	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	5.00	Simple	ACUITE A4 \| Assigned
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.06	Simple	ACUITE BB- \| Stable \| Assigned
Punjab National Bank	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Dec 2024	2.11	Simple	ACUITE BB- \| Stable \| Assigned
Punjab National Bank	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Jun 2026	0.63	Simple	ACUITE BB- \| Stable \| Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Gnanreddy Rakesh Reddy Senior Analyst - Rating Operations Tel: 022-49294065 rakesh.reddy@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.