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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 13.50 | - | ACUITE A3+ | Reaffirmed |
| Bank Loan Ratings | 5.60 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 19.10 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) and short-term rating of ‘ACUITE A3+’ (read as ACUITE A three plus) on Rs.19.60 crore of bank facilities of Jaybee Industries (Nalagarh Unit). The outlook is ‘Stable’. |
| About the Company |
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Mr. Pradeep Agarwal, Proprietor, incorporated Jaybee Industries in November 1981 at Punjab. Jaybee Industries is engaged in manufacturing of distribution of transformer.
Jaybee Industries has its registered office at Bhatinda, Punjab, 1 manufacturing facility at Bhatinda and another manufacturing facility at Nalagarh. Jaybee Industries has its registered office at Bhatinda, Punjab, 1 manufacturing facility at Bhatinda and another manufacturing facility at Nalagarh. The company was formed in 1981 with a single unit in Bhatinda. In the year 2009 they expand another unit with same line of business in Nalagarh. On 26th April of 2016 the proprietorship of Nalagarh unit has been transferred to Mr. Pankaj Agarwal, son of Mr. Pradeep Agarwal. |
| Analytical Approach |
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Acuite has considered consolidated business and financial risk profile of Jaybee Industries and Jaybee Industries (Bhatinda) Jaybee Industries (Nalagarh). The consolidation is on account of similar line of business.
Extent of Consolidation: Full |
Key Rating Drivers
| Strengths |
| Improvement in financial performance during FY22
The total operating income of the group improved from Rs.139.10 crores in FY21 to Rs.172.37 crores in FY22, thereby reporting y-o-y growth of ~24%. The increase in total operating income is led by growing demand of electricity. The consumption of electricity is further led by increase in increased electricity usage post unlock. In line with increase in total operating income, the operating profit also increased from Rs.4.34 crore in FY21 to Rs. 7.48 crore in FY22. Further, the net profit also increased led to Rs.6.61 crore in FY22 vis-à-vis Rs.4.30 crores. The PBILDT margin also increased by 122 bps from 3.12% in FY21. The PAT remained at 3-4% in FY21-22. Comfortable financial risk profile The capital structure as represented by debt –capital ratio improved to 0.33 times in FY22 vis-à-vis 0,47 times in FY21. The improvement in ratio is led by accretion of profit to reserves. Consequently, the tangible net worth increased from Rs.20.66 crores in FY21 to Rs.26.45 crores in FY22. The debt profile majorly comprises of unsecured loans and working capital borrowings. The group had availed COVID loan in FY21. However as per discussion with management, the same has been repaid as on date. The group does not have any term as on date. Similarly, total outstanding liability to tangible net worth also improved to 1.28 times in FY22 as against 2.39 times in FY21. Further, increase in operating profit also resulted in improved interest coverage ratio to 6.95 times in FY22 vis-à-vis 4.57 times in FY21. The net cash accruals to total debt improved to 0.83 times over 0.52 times in FY21. The group is not planning to avail any additional term loan. Hence, ACUITE believes that financial risk profile of the group is expected to improve going ahead. Improved working capital management The Gross Current Asset days of the group improved to 118 days in FY22 vis-à-vis 171 days in FY21, led by decrease in debtors outstanding as on March 31, 2022 coupled with increase in total operating income. The debtors’ days improved to 13 days in FY22 as against 63 days in FY21. The billing cycle is 45 days on an average and bills are realised within 15 days of raising it. The raw materials are procured from Hidalco Limited, Apar Industries, Jai Bhawani Industries Limited. The group receives credit period of 65-90 days from suppliers. The inventory cycle remained at 18 days in FY22 vis-à-vis 6 days in FY21. The average working capital utilisation for the past 6 months ending August 2022 remained at moderate level of 63.19%. |
| Weaknesses |
| Clientele concentration
The group majorly caters to Punjab State Power Corporation Limited, thereby deriving around 90% of revenue. Hence, any delayed realization of receivables can impact the liquidity of the firm. Small scale of operations The scale of operations as represented by tangible net-worth remained at Rs.26.45 crore as on March 31, 2022 (Prov.), despite established track record of operations. Withdrawal of capital As Jaybee Group is a partnership firm, there is also a risk of capital withdrawal which can impact financial risk profile of the firm. However, there has not been any major withdrawal in last three years. |
| ESG Factors Relevant for Rating |
| Not Applicable |
| Rating Sensitivities |
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>Improvement in revenue and profitability margins with successful execution of high value orders and significant increase in scale of operations.
>Any elongation of the working capital cycle leading to deterioration in debt protection metrics and liquidity profile. |
| Material covenants |
| None |
| Liquidity Position: Adequate |
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The liquidity profile of the group continues to remain at adequate level with net cash accruals of Rs.7.25 crores. The group does not have any outstanding term loan and hence, does not have major debt obligations. The current ratio of the group improved to 2.23 times in FY22 vis-à-vis 1.64 times in FY21. Further, the group also maintains sufficient cash and bank balance of Rs.34.53 crores as on March 31, 2022 (Prov.). The net cash accruals of the group is expected to remain at adequate level at Rs.10-12 crores in FY23-24.
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| Outlook: Stable |
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Acuité believes that the outlook on the group will remain 'Stable' over the medium term on account of its experienced promoter and long track record of operations. The outlook may be revised to 'Positive' in case of significant improvement in scale of operations while maintaining the profitability and successful execution of orders. Conversely, the outlook may be revised to 'Negative' in case of any stretch in its working capital management or reduction in operating income of the company.
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| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 172.37 | 139.10 |
| PAT | Rs. Cr. | 6.61 | 4.30 |
| PAT Margin | (%) | 3.84 | 3.09 |
| Total Debt/Tangible Net Worth | Times | 0.33 | 0.47 |
| PBDIT/Interest | Times | 6.95 | 4.57 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| Not Applicalbe |
| 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 • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm |
| Note on complexity levels of the rated instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
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