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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 12.40 | - | ACUITE A2+ | Assigned |
| Bank Loan Ratings | 244.49 | ACUITE A- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 47.67 | - | ACUITE A2+ | Reaffirmed |
| Bank Loan Ratings | 62.00 | ACUITE A- | Stable | Assigned | - |
| Total Outstanding Quantum (Rs. Cr) | 366.56 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed and assigned the long term rating at "ACUITE A-"(read as ACUITE A minus) and the short term rating of "ACUITE A2+" (read as ACUITE A two plus) to the Rs. 366.56 crore bank facilities of Kanpur Plastipack Limited (KPPL). The outlook is ’Stable’.
Rationale for reaffirmation The reaffirmation in rating takes into consideration the experienced management, track record of the company along with the growth in operating revenue of the company. Further the finacial risk profile of the company though modrated remains in a comfortable range. The aforesaid factors are underpinned by decline in leverage profile on account of capex taken and the profitability is susceptible to raw material price fluctuations. |
| About the Company |
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Kanpur based, Kanpur Plastipack Limited was incorporated in July 1971 as a private limited company by Mr Mahesh Swarup Agarwal. The company is engaged in manufacturing and exporting of Flexible Intermediate Bulk Containers (FIBCs), PP Woven Fabrics and Multi Filament Yarn (MFY). The company has installed capacity 30,300 MT with additional 5000 MT added in FY2022. KPL is listed on BSE and NSE.
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| Analytical Approach |
| Acuite has considered the standalone financial and business risk profiles of KPPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Experienced Management and established track record of operations
Incorporated in 1971, the company commenced its operations under the leadership of Mr. Mahesh Swarup Agarwal and thus, the company boasts a long track record of operations of five decades in the Packaging industry. KPPL started manufacturing high-density polyethylene woven fabric, sacks and plastic. Currently, the company is engaged in manufacturing and exporting of Flexible Intermediate Bulk Containers (FIBCs), PP Woven Fabrics and Multi Filament Yarn (MFY). Established presence of the company along with experienced management, has helped KPPL maintain a long relationship with its customers which has aided the company in maintaining healthy revenue. The key customers of the company include names like Pema Verpackung Gmbh, King Bag and Manufacturing amongst others with no major concentration in revenues. Acuité believes KPL will continue to benefit from its long track of operations, a strong presence of the company in the export market and the rich experience of the management over the medium term. Operational Risk Profile The company has registered sharp growth in the revenue from Rs 451.92 crores in FY21 to Rs.629.77 Crore in FY22 on an account of robust growth in exports and attracted new customers from USA. However The company has already achieved a top line of Rs. 144.74 Cr. in Q1FY23 and is on path to achieve the projected top line of Rs. 682 Cr. Financial Risk Profile The financial risk profile of the company is moderate with net-worth of Rs.179.04 Crore in FY22.Gearing level slightly increased at 1.02 times in FY22 against 1.01 in FY21 this is mainly due to higher utilisation of bank limits. Interest coverage ratio is around 4.37 times in FY22 against 6.81 in FY21. FY 21 being exceptional year wherein the profitability margins were higher resulting into better coverage ratios,however FY22 is better than FY20 and is expected to remain in the same range. The company reported healthy net cash accruals at Rs. 36.82 Crore in FY22. The financial risk profile of the company is in comfortable position along with DSCR in FY22 at 1.92 times. Acuite believes that interest coverage profile of the company will remain in comfortable position. |
| Weaknesses |
| Susceptibility of profitability margins to fluctuations in prices of raw material and foreign exchange fluctuation
The basic raw materials required by KPL are plastic granules which is crude oil derivative. The prices of the commodities are subject to volatility in line with those of global crude oil prices. Further, KPL exports ~72 per cent to Europe, USA and some Asian countries and on the other hand imports only ~5 per cent raw materials. Thus, it is exposed to adverse fluctuation in foreign currency exchange rates. However, KPL generally enters into forward covers which partially mitigate the forex risk. |
| Rating Sensitivities |
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| Material covenants |
| None. |
| Liquidity Position |
| Adequate |
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The company has adequate long term liquidity marked by healthy net cash accruals to its maturing debt obligations. The average bank limit utilisation of fund based facility stood at an average of 50per cent in last 12 months and non-fund based facility at 32.98 per cent in the last 12 months. The company has generated the net cash accruals of Rs. 36.82 in FY22 against Rs.18.21 Crore of repayment obligations for the same period. The company has unencumbered cash balance of Rs.0.23 in FY22. Therefore, there are enough net cash accruals and unutilised limits are available to utilize more funds if required to support incremental requirements.
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| Outlook: Stable |
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Acuité believes that Kanpur Plastipack will maintain a 'Stable' outlook over the medium term on the back of its established track record of operations and experienced management. The outlook may be revised to 'Positive' in case the company registers higher-than-expected growth in its revenues and profitability while maintaining its capacity utilization. Conversely, the outlook may be revised to 'Negative' in case the company registers lower-than-expected growth in revenues and profitability or in case of deterioration in the company's financial risk profile or further elongation in the working capital cycle.
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| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 626.77 | 451.92 |
| PAT | Rs. Cr. | 26.21 | 30.22 |
| PAT Margin | (%) | 4.18 | 6.69 |
| Total Debt/Tangible Net Worth | Times | 1.02 | 1.01 |
| PBDIT/Interest | Times | 4.37 | 6.81 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| 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 |
| https://www.acuite.in/view-rating-criteria-55.htm |
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