|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 52.00 | - | ACUITE A3 | Reaffirmed |
| Bank Loan Ratings | 83.00 | ACUITE BBB- | Positive | Reaffirmed | Stable to Positive | - |
| Total Outstanding Quantum (Rs. Cr) | 135.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
|
Acuité has reaffirmed the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) and the short-term rating of ‘ACUITE A3’ (read as ACUITE A three) on the Rs.135.00 crore bank facilities of Shree Balaji Alumnicast Private Limited(SBAPL). The outlook is revised from 'Stable' to 'Positive'.
Rationale for Rating Reaffirmation The rating reaffirmation considers the comfort drawn on long track record of operations,extensive experience of the promoters and stable business risk profile. However the rating is underpineed by the moderate financial risk profile and working capital intensive operations. |
| About the Company |
|
Shree Balaji Alumnicast Private Limited (SBAPL) was incorporated in 1995 by Mr. Sunil Aggarwal. The Company started trading business of Aluminum scrap and then as a backward integration it got engaged into manufacturing business by setting up unit at Dharuhera, Haryana. Since 2008 company is engaged in production of aluminum alloy (molten as well as in solid form) for original equipment manufacturer and automobiles players. SBAPL has 7 manufacturing units; four in Haryana (located at Dharuhera, Gurgoan, Binola and Mewat) and one each at Ludhiana (Punjab), Hosur (Tamil Nadu) and Bangalore (Karnataka). The total production capacity of the company stood at 71,200 MT per annum. Company has signed MOU with various well established vendors (viz Rockman, Ricco Auto, Alicon Cast Alloys & Kiran Udyog) of Maruti, Hero Motocorp and Honda etc for supply of liquid/molten alloys.
|
| Analytical Approach |
| Acuité has taken the standalone view of the business and financial risk profile of Shree Balaji Alumnicast Private Limited (SBAPL) for arriving at this rating. |
Key Rating Drivers
| Strengths |
| Experienced Management
SBAPL is promoted and managed by Mr. Sunil Aggarwal, who has around two decades of experience in the aluminium industry and has been associated with the company since its inception. This has helped the company to establish a strong market position and maintain long-standing relations with its customers. Acuité believes that the company will continue to derive benefit from its experienced management and established market position over the medium term. Revenue and profitability SBAPL reported operating income of Rs. 625.54 Cr in FY2022 as against Rs. 442.29 Cr in FY2021 on the back of recovery in demand post Covid interruptions. EBITDA Margin stood at 4.07 % in FY22 in comparison to 5.17% in FY21. Further, Net Profit margin improved and stood at 0.78% in FY2022 as against 0.25% in FY 2021. SBAPL has achieved Operating income of Rs. ~ 310 Cr. during first five months of FY 23 and company is expecting total operating income of Rs~700 crore in FY 23. Company has order in hand of Rs~ 84 Crores as on date for next 30 days. Financial Risk Profile SBAPL has Moderate financial risk profile marked by Moderate net worth and good debt protection metrics. SBAPL’s net worth stood at Rs. 64.77 Cr as on 31st March 2022 as against Rs. 59.42 Cr as on 31st March 2021(Audited). Company has moderate financial position, Gearing levels (debt-to-equity) improved and stood at 1.75 times as on March 31, 2022 as against 2.03 in FY 2021. Improvement in Gearing Ratio in FY 22 is on account of profit accretions and early repayment of long term debt. comapny has also availed bill discounting facilities from RBL Bank and HDFC Bank. Further, the interest coverage ratio stood strong at 1.49 times for FY2022 as against 1.22 times in FY2021. Debt Service coverage ratio stood strong at 1.27 times for FY2022 as against 1.08 times in FY2021.Total outside liabilities to total net worth (TOL/TNW) stood at 1.95 times as on FY2022 vis-à-vis 2.16 times as on FY2021. However, Debt-EBITA stood at 4.31 times as on 31st March 2022 as against 5.10 times as on 31st March 2021. Locational Advantage: Integrated Manufacturing Unit with Reputed Customers: For a supplier of metal in liquid form, proximity to the customers manufacturing unit is one of the key to success. Cost reduction is one of the major focus areas for any type of organization. Automobile component manufacturer prefers to buy metal in liquid form rather in solid form to save cost on re-melting, burning loss and inventory carrying cost. Therefore, these manufacturer gives first preference to aluminium alloy manufacturer having manufacturing facility nearest to their production plant. SBAPL has started manufacturing with its Dharuhera (Haryana) plant which was built for producing aluminium alloy in molten form. Thereafter SBAPL set up other plants to remain first choice of the customer. Rockman Industries Limited, Rico Auto Industries Limited Maruti Udyog Limited, and Minda Industries Ltd, Sundaram-Clayton Limited, Alicon Castalloys Limited, are the major customers getting supplies from SBAPL. Proximity to customer and approval from big automobile players provide shield to SBAPL while ensuring future business and also pose as entry barrier for new entrant as customer availed cost benefits due to SBAPL strategically located plant. |
| Weaknesses |
| Working capital operations Company has improved yet Intensive working capital requirements as evident from gross current assets (GCA) of 92 days in FY2022 as compared to 132 days in FY2021. Debtor days improved to 41 days in FY2022 as against 61 days in FY2021. Inventory days Improved to 45 days in FY2022 as against 55 days in FY2021. |
| Rating Sensitivities |
|
Sustained growth in operating performance with improvement in profitability sustenance of the comfortable financial risk profile Slowdown in industry leading to inventory pile up |
| Material covenants |
| None |
| Liquidity Position |
| Strong |
|
SBAPL has Strong liquidity marked by adequate net cash accruals to its maturing debt obligations. Company generated cash accruals of Rs. 6.98 crore for FY2022 as against obligations of Rs. 1.72 crores for the same period. Current Ratio stood at 1.37 times as on 31 March 2022 as against 1.38 times in the previous year. Bank Limit utilization in last six months was ~68% providing additional cushion to company to meet contingencies. Further company has Fixed Deposits of Rs. 13.65 crores out of margin requirement for NFB Facilities are Rs 6.70 Crores leaving Rs 6.95 as unencumbered Fixed Deposits. Therefore, firm has Strong liquidity to meets its requirements
|
| Outlook: Positive |
|
Acuité believes that SBAPL will benefit from its established relationship with its customers and suppliers coupled with sustained scale of operations, profitability and debt protection metrics over the medium term. The outlook may be revised to ‘Stable’ in case of significant deterioration in operating income, thereby weakening profitability and further stretch in the working capital cycle. The rating will be upgraded in case of sustenance improvement in scale of operations along with improvement in working capital operations.
|
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 625.54 | 442.29 |
| PAT | Rs. Cr. | 4.90 | 1.09 |
| PAT Margin | (%) | 0.78 | 0.25 |
| Total Debt/Tangible Net Worth | Times | 1.75 | 2.03 |
| PBDIT/Interest | Times | 1.49 | 1.22 |
| Status of non-cooperation with previous CRA (if applicable) |
| Brickwork, vide its press release dated May 21, 2021 had denoted the rating of Shree Balaji Alumnicast Private Limited as ‘Brickwork BB+; ISSUER NOT COOPERATING’ on account of lack of adequate information required for monitoring of ratings. |
| 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 • 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 |
|
| |
|
|
||||||||||||||||||||||||||||||||||||||||
|
|
Contacts |
| Analytical | Rating Desk |
| About Acuité Ratings & Research |
