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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 10.00 | ACUITE BBB- | Stable | Assigned | - |
| Bank Loan Ratings | 51.75 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 6.25 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding | 68.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and assigned the long-term rating 'ACUITE BBB-' (read as ACUITE triple B Minus) and the short-term rating ‘ACUITE A3’ (read as ACUITE A three) on the Rs.68.00 crore bank facilities of Siyaram Granito Private Limited (SGPL). The outlook is ‘Stable’.
Rationale for Rating The reaffirmation in rating takes into account the established track record of operations and experienced management of more than a decade in ceramic industry. Further, the rating takes into consideration growing revenue which stood at Rs.132.97 Crore in FY23 against Rs.72.89 Crore in FY22 and Rs.62.09 Crore in FY21. The increase revenue is contributed by company’s recently completed capital expenditure related to second line of business of glazed vitrified tiles. Further, the rating factors in moderate financial risk profile characterized by moderate gearing at 1.01 times as on March 31, 2023 and above average debt protection metrics with DCSR stood at 1.54 times as on March 31, 2023. These strengths are however, partly offset by the moderately intensive working capital nature of operations marked by elongated receivables and fragmented industry characterized by intense competition and vulnerability in the margins due to fluctuations in the raw material prices. |
| About the Company |
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Incorporated in 2014 in Gujrat, Siyaram Granito Private Limited (SGPL) is carrying out an activity of manufacturing Ceramic Vitrified Tiles with nano polish technology. The manufacturing facility is located at Jetpar Road, Jivapar Chakampar, Rajkot, Gujarat. Earlier the unit was manufacturing for nano vitrified tiles installed capacity is 62160 metric tons per annum and April 2022 onwards, product change to Glazed vitrified tiles up with an installed capacity of 136080 metric ton per annum. SGPL is promoted and managed by Mr. Jayprakash Bavarva and other three directors. The company is managed by four directors namely Mr. Jayprakash Nathalal Bavarva, Mr. Chirag Manubhai Ujariya. Mr. Jayesh Thakarshibhai Varsda and Mr. Devendra Bhudarbhai Barasara.
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| Unsupported Rating |
| Not applicable. |
| Analytical Approach |
| Acuite has considered the standalone financial and business risk profiles of Siyaram Granito Private Limited (SGPL) to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Experienced Management and established track record of operations
SGPL has been engaged in manufacturing of vitrified tiles from 2014. Currently the company is managed by Mr. Jayprakash Nathalal Bavarva, Mr. Chirag Manubhai Ujariya, Mr. Jayesh Thakarshibhai Varsda and Mr. Devendra Bhudarbhai Barasara who has an experience of about more than a decade in ceramic industry. Their experience into this line of business would help the company to flourish. Acuite believes that SGPL will continue to benefit from its Established track record and experience of promoters in this line of business. Augmentation in business risk profile The operations of the company has improved with a significant increase in scale of operations and operating margins. The company has recorded a turnover of Rs.132.97 Crore in FY23 against Rs.72.89 Crore in FY22 and Rs.62.09 Crore in FY21. The significant growth in turnover in FY23 is due to commencement of second line of business of glazed vitrified tiles on October 2022 which has resulted in increased volume sales and increase in topline is also contributed by better price realization of each product. Further, the EBITDA Margin of the company stood at 13.57% in FY23 against 11.23% in FY22. The margins of the company are increasing due to addition of new business line. The company is expected to generate top line under the range of Rs.180 crore in succeeding years on an account of full fledge operations of the new line of business. Acuite believes that operation of the company may continue to improve over the medium term backed by commencement of new line of business. Moderate Financial Risk Profile The financial risk profile of the company is moderate marked by moderate net-worth, low gearing and comfortable debt protection metrics. The net worth of the company stood at Rs.47.82 Crore as on March 31, 2023 against Rs.44.97 Crore as on March 31, 2022 and Rs.24.14 Crore as on March 31, 2021. The promoter of the company infused capital in the business in FY22 of Rs.5 Crore to support the capital expenditure along with Unsecured loans which treated as quasi to the tune of approximately Rs.15.00 Crore. Further, the total debt of the company stood at Rs.48.43 Crore as on March 31, 2023 against Rs.42.07 Crore as on March 31, 2022 and Rs 28 Cr as on March 31, 2021. The long term debt increased in FY22 of Rs.25 Crore for the capital expenditure related to the second line expansion. Further, the debt protection metrics stood comfortable with the interest coverage ratio and debt service coverage ratio of the company stood at 3.45 times and 1.54 times respectively for FY23 against 3.70 times and 0.96 times for FY22 respectively. The company follows a conservative financial risk policy reflected through its peak gearing of 1.16 times as on March 31, 2021. The gearing of the company is moderate stood at 1.01 times as on March 31, 2023 against 0.94 times as on March 31, 2022 and 1.16 times as on March 31, 2021.The TOL/TNW ratio stood at 1.55 times as on March 31, 2023 against 1.23 times as on March 31, 2022. Acuite believes that the financial risk profile of the company may continue to remain moderate with no major debt-funded capex plan. |
| Weaknesses |
| Working capital intensive operations
The working capital operations of the company are intensive marked by high GCA days which stood at 196 days as on March 31, 2023 against 215 days as on March 31, 2022. The GCA days of the company has improved on an account of efficient inventory management which stood at 58 days in as on March 31, 2023 as compared to 80 days as on March 31, 2022. The average inventory days maintained by the company is approximately around 60 days. The debtor days of the company stood at 135 days as on March 31, 2023 against 118 days as on March 31, 2022. The average debtor days maintained by the company is approximately in the range of 90-120 days. On the other hand, the creditor days of the company stood at 168 days as on March 31, 2023 against 196 days as on March 31, 2022. Acuite believes that working capital operations of the company may continue to remain intensive considering the nature of business. Volatility in Input Prices Volatility in input costs is a frequent issue the ceramic sector faces. This volatility can be due to a number of things, including changes in the cost of energy, transportation, and raw material costs. Additionally, depending on factors including availability, demand-supply dynamics, and geological conditions, clay prices can fluctuate widely. Any alteration in these variables may result in variations in clay pricing, which will directly affect the input costs for makers of ceramic products. Overall, to remain competitive in the market, makers of ceramics must continually evaluate and handle the problem of input price fluctuation. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity profile of the company is adequate. The company has generated net cash accruals of Rs.12.27 Crore as on 31st March 2023 against debt repayment obligations of Rs.6.07 Crore in the same period. Further, the company is expected to generate net cash accruals under the range of Rs.11 Crore to Rs. 13 Crore against the debt repayment obligation of approximately Rs.5.00 Crore in near to medium term. The unencumbered cash and bank balance of the company stood at Rs.0.05 Crore as on 31st March 2023. The current ratio of the company stood at 1.35 times as on 31st March 2023 against 1.46 times as on 31st March 2022. Also the fund based average bank limit utilization of the company stood at 84.59% in last 9 months ending December 2023.
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| Outlook: Stable |
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Acuité believes that SGPL will continue to benefit over the medium term due to its “established market position and established relations with its customers, moderate financial risk profile and will maintain a ‘Stable’ outlook and benefit over the medium term from its promoter’s extensive industry experience. The rating outlook may be revised to 'Positive' in case of sustainable growth in revenues while maintaining its profitability and improvement in working capital operations. Conversely, the outlook may be revised to 'Negative' if the working capital cycle further deteriorates due to stretch in payment realisation from customers or if the company undertakes significant debt funded capex leading to deterioration in its financial risk profile, especially liquidity.
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| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 132.97 | 72.89 |
| PAT | Rs. Cr. | 2.26 | 1.19 |
| PAT Margin | (%) | 1.70 | 1.63 |
| Total Debt/Tangible Net Worth | Times | 1.01 | 0.94 |
| PBDIT/Interest | Times | 3.45 | 3.70 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable. |
| Any other information |
| None. |
| 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 |
| Note on complexity levels of the rated instrument |
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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
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