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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 14.50 | ACUITE D | Downgraded | - |
| Total Outstanding Quantum (Rs. Cr) | 14.50 | - | - |
| Rating Rationale |
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Acuite has downgraded the long-term rating to ‘ACUITE D’ (read as ACUITE D) from‘ACUITE C’ (read as ACUITE C) on the Rs.14.50 Cr. bank facilities of Specific Alloys Private Limited (SAPL).
Rationale for downgrade The rating is downgraded basis the written feedback received from the banker confirming the account being NPA. |
| About the Company |
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Incorporated in 2000, Specific Alloys Private Limited (SAPL) is a Maharashtra-based company engaged in manufacturing of aluminum alloys of all grades. It is operated by its managing director, Mr. Narendra Mohanlal Surana, along with directors, Mr. Lakendra Narendra Surana and Mr. Jinendra Narendra Surana. It has two manufacturing units: one in Alandi, Maharashtra another one in Pirangut, Maharashtra.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of SAPL to arrive at the rating |
Key Rating Drivers
| Strengths |
| Established track record of operations and experienced management
Incorporated in 2000, Specific Alloys Private Limited (SAPL) is led by its managing director, Mr. Narendra Mohanlal Surana, who has experience of more than three decades in the aluminum industry and directors, Mr. Lakendra Narendra Surana and Mr. Jinendra Narendra Surana, who have experience of a decade in the aluminum industry. The extensive experience of the directors has led to established market presence of SAPL, enabling it to build strong business ties with its suppliers and customers. |
| Weaknesses |
| Defaults in servicing debt repayments
SAPL, as per credit bureau report has defaulted and is categorised as sub-standard and doubtful. Going forward, its ability to timely service its debt obligations will remain a key rating sensitivity. Working Capital Intensive Operation Working capital operations of the company is intensive marked by GCA days of 345 days in FY2022 as against 290 days in FY2021. High GCA days are driven by high debtor and inventory days. Debtor days stood at 205 days in FY2022 as against 168 days in FY2021. Higher debtor days in FY2022 is on account of year end sales in FY2022. Inventory holding period stood at 135 days in FY2022 as against 126 days in FY2021. Raw materials of the company majorly include aluminium scrap. Deteriorating operating performance Operating performance of SAPL has seen a deterioration as revenues of the company have dropped to Rs. 46.16 crores in FY2022 from Rs. 51.00 crores in FY2021. Its peak turnover was at Rs. 92.20 crore in FY2018. Specific Alloys Pvt Ltd manufactures various types of Aluminum alloys for Auto ancillary companies. EBITDA margins of the company remained range bound at 8.13 percent in FY2022 as against 8.94 percent in FY2022. PAT margins stood at 1.18 percent in FY2022 as against 1.05 percent in FY2021. Weak Financial risk profile Financial risk profile of the company is weak with a moderate tangible networth, high gearing and stretched debt protection metrics. Tangible networth of the company stood at Rs. 10.16 crore as on 31 st March 2022 as against 9.61 crore as on 31 st March 2021. Increase in tangible networth is on account of accretion of profits to reserves. Gearing of the company is high at 4.24 times as on 31 st March, 2022 as against 4.32 times as on 31 st March, 2021. TOL/TNW stood at 4.26 times as on 31 st March 2022 as against 4.39 times as on 31 st March, 2021. Debt protection metrics of the company is stretched with DSCR below unity. DSCR of the company stood at 0.69 in FY2022 as against 0.52 times in FY2021. Interest coverage ratio stood at 1.29 times in FY2022 as against 1.36 times in FY2021. |
| Rating Sensitivities |
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Timely repayment of debt obligation
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| Material covenants |
| None. |
| Liquidity Position |
| Poor |
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SAPL has a poor liquidity as the SAPL was unable to pay its debt obligation on time.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Provisional) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 46.16 | 51.00 |
| PAT | Rs. Cr. | 0.85 | 0.53 |
| PAT Margin | (%) | 1.84 | 1.05 |
| Total Debt/Tangible Net Worth | Times | 4.24 | 4.32 |
| PBDIT/Interest | Times | 1.40 | 1.36 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable. |
| Any other information |
| Acuite is yet to receive the latest No Default Statement from the rated entity despite repeated requests and followups. |
| 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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